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Peter Davis

An writer at FOMOdrive

  • Aug 02, 2023
  • 2 min read

The Moscow Exchange Index returned to the levels before the start of the CBO

The Moscow Exchange index has regained its pre-special operation in Ukraine levels.

Oil prices increasing, corporate announcements, and the weakening of the ruble are all factors that contribute to the stability of the stock market.

On Tuesday, the Moscow Exchange Index closed the day just below 3100, completely recovering the losses it had experienced since the start of the CBO on February 24, 2022.

VTB My Investments notes that the rally in the market is being driven by the weakening of the ruble, record dividends paid out (mainly by Lukoil and Sberbank) and their reinvestment, as well as the recent upturn in oil prices.

"First" management company believes that the market's euphoria is due to the start of a new reporting period, as well as the anticipation of interim dividends from many issuers, even those who have not paid out dividends for the past 1.5 years.

The Moscow Exchange index saw a surge this week, largely due to the strong performance of Sberbank shares, which make up 14.25% of the index. The stock rose on the back of positive expectations for the bank's earnings, which will be reported for the first half of the year under IFRS this week.

Freedom Finance Global notes that the market is growing due to positive corporate news. NOVATEK, VTB, and Yandex have already released strong IFRS results, and many other companies have reported strong operating results for the quarter, which has created a sense of optimism.

IFC Solid believes that the devaluation of the ruble, combined with the increase in prices of raw materials and goods globally, will create the necessary conditions for the main companies from the Moscow Exchange index to have high incomes. This will lead to record or near-record profits for oil and gas companies, which will result in large dividends.

Freedom Finance Global predicts that the Moscow Exchange index may reach 3600-3700 points by the end of 2023, representing a 44% increase since the start of the year.

The Russian market appears to be locally overheated, yet not overvalued. Despite the potential for a deep drawdown, institutional investors are not selling, and individuals are typically net buyers, as reported by VTB My Investments.

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