POLL-Russian stocks to reach record highs in 2021, geopolitics in focus


By Andrey Ostroukh

MOSCOW, Aug 26 (Reuters) - Russia's stock market is forecast to reach all-time highs next year, but the gains will be capped by geopolitical risks that eclipse concerns about the novel coronavirus, a Reuters poll of market experts showed.

Russia's MOEX index .IMOEX was among the best global performers in 2019. After a sell-off in March, it is on the mend from a double shock caused by a drop in the price of oil, a key export, and the coronavirus.

Russian stocks are poised for more gains even though new risks are likely to materialise, according to forecasts from 13 analysts polled in the second half of August.

The MOEX rouble-denominated index is seen recovering to 3,150 by the end of this year, up about 4.0% from around 3,029 on Aug. 25. Year-end forecasts ranged from 2,681 to 3,300.

"With the global COVID recession clearly behind us and a new economic expansion just started ... the new bull run usually extends until the next major recession event, which is probably several years away given the massively expansionary global fiscal and monetary policy," said Mikhail Kuzin, an analyst at Raiffeisenbank said.

Kuzin saw the risk of a second round of global shutdowns as a result of coronavirus as very small.

The November U.S. presidential election is set to take centre stage for investors in Russian shares, given the sanctions that the U.S. imposed for Russia's meddling in the 2016 elections, something that Moscow denies.

"The worst-case scenario can occur if new geopolitical tensions between Russia and the world arise," said Elena Kozhukhova, an analyst at Veles Capital investment firm.

Domestically, Russian stocks are seen benefiting from the central bank's decision to cut rates to all-time lows, which has eroded the attractiveness of bank deposits. Authorities' plans to tax returns from bank deposits could further turn investors away from deposits to stocks.

By the middle of 2021, the MOEX is seen reaching 3,225 before hitting a record high of 3,460 by end-2021.

The dollar-based RTS index .IRTS is forecast to trade at 1,380 points by the end of this year, up about 9.0% from around 1,267 on Aug. 25. Forecasts in the poll ranged from 1,200 to 1,500.

The RTS is seen climbing further to 1,445 by mid-2021 and to 1,535 by the end of the next year.

(Reporting by Andrey Ostroukh; Additional polling by Khushboo Mittal and Sarmista Sen; editing by Ross Finley, Larry King)

((andrey.ostroukh@thomsonreuters.com; +7 495 775 1242;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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