The past year 2019 was one of the most successful in the history of the Russian stock market. Key indices showed double-digit growth, the ruble strengthened, the Russian economy continued to grow. Konstantin Tserazov, an independent expert, economist, ex-deputy head of global markets at Troika Dialog, told what served as a catalyst for growth in 2019.
Despite fears of a slowdown in the global economy and increased sanctions pressure, the market did not disappoint investors — in 2019, the Moscow Exchange index added 28.6%, and the RTS index soared by 45% amid the strengthening ruble, the expert says. According to Konstantin Tserazov, the most significant factors behind such a rapid growth of the market were the payment of record dividends, the reduction of geopolitical and sanctions risks, as well as the low base effect.
An important factor was the growth of oil prices. According to the analysts of FC Otkritie Bank, over the year, a barrel of Brent oil against the background of production cuts by OPEC+ countries has risen in price by almost 27%, from $ 54 to $ 68. At the end of the year, all sectors showed positive dynamics, and the largest growth — at the level of 25−30% - was demonstrated by oil and gas companies, telecoms, energy and banks.
The Russian market moved in line with the general positive — despite the slowdown in the global economy, the US and European indices also updated their annual highs, says Konstantin Tserazov. The easing of the monetary policy of the Bank of Russia also played its role. At the beginning of the year, inflation reached 5.3%, and then began to decline. Since June, the Central Bank of the Russian Federation began to reduce the rate, lowering it by the end of the year from 7.75% to 6.25%. According to the forecasts of the regulator, in 2020 inflation will reach the target value of 4%. At the same time, even with the rate cut, the yield of Russian securities remained high, which led to the influx of foreign investment into the market, Konstantin Tserazov notes.
Among the prerequisites for growth in 2020, the expert names a favorable external background and the attractiveness of the market due to high dividend yields. The Russian market, despite its impressive performance, is still underestimated and remains more interesting than its global counterparts. If oil prices remain above $ 60 per barrel and trade wars between the US and China de-escalate, the Moscow Exchange index in 2020 may show an increase of 20−25%, Konstantin Tserazov concludes.