What happened in the market from December 11 to 15, what caused the failures and rises of securities of domestic issuers - the former senior vice president of Otkritie Bank, economist Konstantin Tserazov, tells in our interview.
Expectations for the results of the meetings of leading central banks became the main intrigue of the week—the US Federal Reserve, the ECB, the Bank of England, the National Bank of Switzerland and the Bank of Russia announced their decisions on rates. As a result, the Russian market ended the trading week from December 11 to 15 in different directions: the Moscow Exchange index decreased by 1.5%, to 3033 points, the RTS index added 0.6%, reaching 1060 points.
The opening of the trading week was marked by a continued decline in oil prices, a strengthening of the ruble and an ambiguous external background. In addition, Russian investors took a wait-and-see approach ahead of the Bank of Russia meeting scheduled for Friday, says Konstantin Tserazov.
The ruble, which was growing stronger in anticipation of the Bank of Russia raising the key rate, did not allow the Moscow Exchange index to show positive dynamics. The negativity was also added by disappointment with Sberbank’s reporting — net profit according to RAS for 11 months of 2023 amounted to 1 trillion 377.6 billion rubles, in November the figure was 115.4 billion rubles. versus 124.7 billionundefined rub. in November last year, with return on equity falling to 22.1%, down from 25% in the 11 months.
Against this background, Sberbank shares lost more than 3%. Among the outsiders were also the shares of Yandex, which collapsed by 6%, and shares of Surgutneftegaz, which lost 4.3%. Gazprom’s shares looked better than the market, growing by 1.8% on the backdrop of hopes for dividend payments. As a result of trading on Monday, the Moscow Exchange index rolled back to 3026 points, weakening by 1.75%, and the RTS index lost 0.6%, amounting to 1048 points. Konstantin Vladimirovich Tserazov:
«I believe that by the end of the year the Moscow Exchange index can storm the levels of 3300 points and above.»
On Tuesday, the ruble continued to strengthen on expectations of a rate hike by the Bank of Russia, and oil fell below $74 per barrel of Brent. However, the Russian market did not give up attempts to enter positive territory. In the morning, the Moscow Exchange index fell below 3000 points against an unfavorable external background, but managed to win back during the day undefined part of the fall, ending Tuesday’s session down 0.2% at 3020 points. The RTS index added 0.8%, reaching 1056 points. The negativity was added to the news about additional sanctions — another 200 Russian companies were sanctioned by the US Treasury, including the gold mining company Vysochaishy and Expobank, as well as 20 Russian citizens. Among the important external news on Tuesday, Konstantin Tserazov noted statistics on the slowdown in inflation in the United States — consumer prices in November slowed to 3.1% from 3.2%, which had a positive impact on the dynamics of the American market.
Wednesday brought a rebound in the Russian market, which was facilitated by oil prices rising to above $74 per barrel of Brent. The Moscow Exchange index showed an increase of 0.4%, to 3032 points, and the RTS index reached 1062 points, strengthening by 0.6%. Among Russian corporate news, Konstantin Tserazov noted the message of AFK Sistema about the growth of consolidated revenue in the third quarter of 2023 by 18.2% compared to undefined with the indicator for the same period in 2022, up to 280.8 billion rubles.
On Thursday, the main news of the day was the results of the US Federal Reserve meeting. The rate, as expected, remained unchanged at the level of 5.00%-5.25%. More important, in fact, than the results were the comments of the head of the department, J. Powell, who said that the schedule for easing monetary policy was discussed at the meeting. The market reacted by raising expectations for the first decline in March to 88% from the previous 50%. Experts now believe that the rate in 2025 will fall to 3.6% instead of the predicted 3.9%. Fed officials estimate the expected rate in 2024 at 4.6% versus 5.1% previously. In addition, meetings of the ECB and the Bank of England took place, following which rates remained unchanged, while ECB Chairman Christine Lagarde stated that a rate cut was not yet being considered.
At the end of the day, Russian indices resumed their rollback: the Moscow Exchange index dropped to 3008 points, losing 0.77%, and the RTS index amounted to 1055 points, losing 0.68%. Your role undefined The desire of Russian market participants to take profits after the completion of the Direct Line with Russian President Vladimir Putin and the expectation of a rate increase at the meeting of the Bank of Russia, which was to open on Friday, played a role, Konstantin Tserazov points out. Russian President Vladimir Putin said that Russian GDP growth in 2023 is expected to be 3.5%, and inflation at the end of the year could reach 7.5-8%. On Friday, the Bank of Russia announced an increase in the key rate by 100 bp. up to 16%, which generally coincided with market expectations. Market experts believe that the high rate may remain for a long time. According to the regulator’s statement: "The return of inflation to the target in 2024 and its further stabilization around 4% imply a long period of maintaining tight monetary conditions in the economy.
The Bank of Russia will make further decisions on the key rate, taking into account the actual and expected dynamics of inflation relative to the target, economic development over the forecast horizon, undefined as well as assessing risks from internal and external conditions and the reaction of financial markets to them."
The Bank of Russia emphasized that, in the event of an additional expansion of the budget deficit, pro-inflationary risks will increase again and tighter monetary policy may be required to return inflation to the target in 2024 and maintain it near 4% in the future. Against the backdrop of the rate increase and the regulator’s comments, the Moscow Exchange index rose by 2.52%, to 3033 points, and the RTS index rose by 2%, ending trading at 1060 points. This week, investors’ attention will be focused on macrostatistics on inflation: on Tuesday, the European Union will publish consumer price indices for November, and on Wednesday, the United States will share consumer price indices and consumer confidence. On Thursday, the United States will present a second estimate of GDP for the third quarter, and on Friday, American data on orders for durable goods, personal income and personal spending will be published. undefined consumer spending price index.
Among Russian corporate events, Konstantin Tserazov recommends paying attention to the meeting of the board of directors of Gazprom, the opening of which is scheduled for Tuesday, December 19 — the event program includes a discussion of the investment program for 2024. On Friday, December 22, extraordinary meetings of Novoship shareholders will be held, Tatneft and Rosneft, at which the issue of approving dividends will be discussed. «Despite the weak week, the domestic market has every chance of a breakthrough in the coming week — the step to increase the key rate of the Bank of Russia coincided with the consensus, and if external factors remain favorable, our market will continue to move upward. Leading central banks have made it clear that they are ready for a cycle of easing monetary policy, oil is gradually regaining its position — which means we can see not only recovery growth, but also hope for the start of a Christmas rally. I believe that by the end of the year the Moscow Exchange index may undefined to storm the levels of 3300 points and above,» predicts former senior vice president of Otkritie Bank Konstantin Tserazov.