Page 28 - bne_October 2018_20181001

28 I Special focus bne October 2018
Russian stocks markets
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Investing into Russian stocks has been a wild ride for those investors brave enough to take the risk. Since the inception of the dollar denominated Rus- sia Trading System (RTS) in 1994 with an arbitrary index value of 100 the mar- ket has been through at least five super cycles. In 1997 it hit a peak value of 571.7 on October 6 before crashing to 38 in the wake of the 1998 financial crisis.
It then rose again to an all time peak of 2487.92 on May 19 2008, before crashing back to a low of 549.43 in 2009.
Investing Russia has never been a buy and hold place as timing the invest- ments to match the pole-to-pole swings are everything. After the 2008 crisis the index slowly recovered to around 1500 but following the sell off caused by the Kremlin’s decision to annex the Crimea in 2014 it has been trapped in a range that oscillates between 1000 and 1300.
However, under the seeming placid sur- face of the capital market pond there are strong currents flowing in the markets. Russia was still an economic basket case in 1998 and it had only really enjoyed about two years of rapid growth when the 2008 crisis hit. Today the country has been transformed and has become a
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more or less normal country that is still dealing with some big problems.
Many of the companies on the market have been about and investing into their sectors for over two decades. Incomes have risen from next to nothing to on
a par with those at the bottom end of the European Union on purchase price parity (PPP) terms. The rising incomes has driven consumer stories which has been a favourite investment meme, but also the real estate sector, especially after mortgages appeared in about 2001
“Many of the companies on the market have been about and investing into their sectors for over two decades”
Russian stock indicies: RTS vs MICEX