Page 74 - RusRPTJan22

8.3 Stock market
8.3.1 Equity market dynamics
The RTS sold off heavily in November and December as geopolitical fears finally hit the market. The RTS peaked at a decade long high in October touching briefly on 1,900, but after reports coming out of the US of a military build up on Ukraine’s border appeared the market sold to fall to a low of just under 1,600 in December.
The market recovered somewhat in the last days of the year after US president Joe Biden agreed to a new summit with Russian President Vladimir Putin in January to start talks on a new security deal. Where the market goes in 2022 will depend on the progress of these talks. However, in their end of year assessments analysts said they expect the rally to resume and have set a target of 2,000 for the full year. However, the outcome remains very uncertain as the security talks will be very difficult and Putin has made it clear he is willing to take military action if progress is not made.
A boom in retail investment into stocks is slowing down. The growth in personal brokerage accounts has moderated, matched by an upward trend in deposits even as stock market dynamics were favourable.
The q/q growth in personal brokerage accounts in 3Q21 hit its lowest level since mid2019, which we attribute to the following four developments.
Deposit rates were up, increasing the risk free rate for households. In particular, the maximum retail deposit rate at the end of November was 7.2% vs. 4.4% a year ago; retail deposit dynamics were +6.1% y/y for October, with the trend likely to have continued in November, in our view.
Rates on savings accounts were also higher, with the withdrawal conditions being more flexible than those for deposits.
The market is becoming saturated in terms of the number of brokerage accounts opened, although over half are either empty or of a negligible amount, corresponding to 19% of the country's labour force.
Russian oil and gas shares have risen by 40% YTD as of December 14, outperforming the MSCI EM Energy Index by 20% on the back of improving financials, driven by stronger oil and gas prices. We still see material upside in Russian oil and gas names, which we believe offer sustainable double-digit dividend yields - more than double the average for global peers.
74 RUSSIA Country Report January 2022 www.intellinews.com