The Russian stock market has significant potential for growth – this conclusion was made by analysts of RSHB Asset Management following the results of analysis of current macroeconomic conditions.
Experts note that 2022 was for the Russian economy the year of structural transformation in challenging new conditions. Geopolitical situation and sanction pressure led to a change in almost all sectors of the economy.
Analysts are cautious about assessing GDP dynamics in 2023. In the current conditions, there are a number of factors that can lead to stronger drawdown, than expected. Among them, there is the situation with Russian exports as a whole and energy supplies, in particular, as well as the potential for the return of the ruble exchange rate to levels close to fundamentally sound ones. At the same time, according to the experts of “RSHB Asset Management,” in 2023 energy exports may be under pressure amid an embargo on Russian oil and gas, and also difficulties with reorientation to other sales markets.
If we consider the Russian stock market separately from the external geopolitical influence, then it is extremely attractive for investor. First of all, it is worth paying attention to the interest of citizens of the Russian Federation to this market. According to the Moscow Exchange, by the end of January 2023, the number of individuals, having brokerage accounts on the stock exchange, reached 23.5 million against 17.4 million people in January 2022, that is, + 35% per year. Number of accounts opened increased over the same period by 37.5% and amounted to 39.6 million.
The current assessment of the Russian stock market also implies a significant growth potential as geopolitical tensions ease. Not less important factor supporting the Russian market is its current isolation from foreign markets. Given forecasts for a possible global recession and the subsequent fall of Western markets, isolation of the market of the Russian Federation reduces the risks of exogenous shocks (excluding geopolitical ones) to a minimum.
“We believe that the Russian stock market has significant potential for growth as geopolitical tensions ease or in the lack of its growth. The most attractive sectors this year in our opinion are healthcare, utilities, finance, metallurgy and IT sector”, Kirill Tereshchenko, analyst at RSHB Asset Management LLC, said.