Page 79 - RusRPTJun19

A Reuters poll of leading analysts says Russia's stock market could hit record highs towards the end of this year if there are no more sanctions or major shocks, the wire reported on May 29.
Russian stocks has already been having a good year with the leading dollar denominated Russia Trading System (RTS) index up 20% as of May 29 making it one of the best performing markets in the world YTD.
The RTS index is forecast to rise more than 3% from a May 24 close of 1,279.11 to 1,323 points by the end of the year, the poll showed. By the middle of 2020, it is seen at 1,225, with forecasts ranging from 1,050 to 1,500.
The ruble-based MOEX index has also been setting new record highs and has also returned more than 10% YTD. Analysts forecast MOEX index will reach between 2,220 to 2,950 by the end of this year, its highest level ever.
While economic growth in the first quarter disappointed coming in at 0.8%, well below the consensus forecast, at the company level the leaders in most sectors are doing well and reporting both strong sales and profits as a process of consolidation continues.
Moreover, the owners are returning these profits to investors in the form of some of the highest dividend yields in the world. Russia is just coming into the dividend season which are paid out over the summer months and investors are taking their bets, buying into their favourite names ahead of record dates that entitle shareholders to receive dividends. ING estimate that some RUB2 trillion ($30.6bn) will be distributed as dividends this year.
“We estimate that 31% of this sum, or RUB0.6 trillion, could potentially be converted into FX, an equivalent of about $9bn. July is the heaviest month in terms of payments, with 40% of the total sum, including 34% of FX portion, due,” Dmitry Dolgin, ING’s chief economist for Russia, said in a note.
Against this the fear of new US “crushing” sanctions is fading and as the US economy cools that is pushing investors back into emerging markets as they become “risk on” again. However, analysts warn that unpredictable and large shocks are still possible and could pull the rug out from under the market’s feet.
"Risks are skewed to the downside, as Russian economic growth may disappoint, while Russia risk levels appear close to fair value, or even perhaps too low already," said Slava Smolyaninov, chief strategist at BCS Global Markets as cited by Reuters.
Russian investors return to the stock market. According to data from Investfunds, after a five-month withdrawal from the collective investment
79 RUSSIA Country Report June 2019 www.intellinews.com