Page 63 - Russia OUTLOOK 2022

6.0 Markets Outlook
The Russian equity market had its best year in a decade in 2021 and is expected to just as well in 2022. The dollar denominated Russia Trading System (RTS) returned around 30% on the year in 2021, including a 20% sell-off in the last two months of the year.
Banks and oil stocks massively outperformed and made the market one of the best performing in the world.
The Russian equity market is seen as poised for growth in 2022 by Aton, with blue chips trading at 30-40% discount to global peers, dividend yields of 9-14%, and overall upside potential. Aton analysts expect the RTS Index to jump by 20-30% to over 2,000 points in 2022. The analysts also see equity investment as a stable hedge against inflation.
For the equity market economic factors will conspire to make Russian stocks appealing again. After lying moribund since the sanctions regime was imposed in 214 and the RTS index trapped in a trading band between 900 and 1,300, the stock market broke out in 2018 and rallied strongly in 2019. Again the pandemic postponed the rally, but it quickly resumed in the last quarter of 2020 when the vaccines appeared and the RTS touched a decade-long high of 1,900 in October 2021.
Despite a sell off in the last months of 2021 due to renewed geopolitical tensions, most analysts expect the stock market rally to continue in 2022 and have an end of year RTS target of 2,000.
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