Thanks to sanctions, the Russian economy began to demonstrate resistance to global shocks
“Brexit unexpectedly showed the resilience of the Russian economy to global shocks: thanks to the strong capital outflow in previous years and sanctions, the Russian market turned out to be a “paradise for investors,” writes RBC in a material devoted to the current situation on the Russian stock market.
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“According to the Financial Times, in two days of trading after the victory of Eurosceptics in the Brexit referendum, global stock markets lost $3 trillion, of which $2,8 trillion was in the stock markets of developed countries,” the publication notes. – The S&P Global Broad Market Index fell by 6,9% after the referendum. It was the biggest two-day drop since the financial crisis crash in November 2008. According to S&P Dow Jones Indices, the result was the 12th largest collapse on record. The S&P 500 lost nearly $1 trillion in two days, the third-largest drop in value terms.”
“For comparison: in Russia, after the announcement of the results of the referendum in Great Britain, Friday trading on the Moscow Exchange opened with a decline in the MICEX index by 3,28% (to 1856,3 points), but by the end the fall was partially won back, and on Tuesday the index began to grow (by the end of the main trading session - by 0,84%, to 1857,23 points), RBC points out. – An increase in prices for Russian securities was observed on Tuesday and at trading in London: LUKOIL shares on the LSE rose by 1,25%, NOVATEK rose by 1,27%. A similar situation occurred in the debt markets. The Moscow Exchange government bond index on Tuesday rose by 0,2%, and corporate bonds by 0,08%. A more noticeable increase in prices over the last three days is noticeable in the segment of sovereign Eurobonds, which increased in price by an average of 1–1,5 percentage points. In particular, the price of paper “Russia-23” increased from 106,5 to 108,3%, “Russia-26” added more than 1 percentage point in price, reaching 102,38%. Long-term sovereign Eurobonds are also showing growth: the yield on the Russia-42 bond has dropped to a two-year low of 4,88% per annum.”
At the same time, experts say that it was Western sanctions that helped Russia adapt and reduce its dependence on American and European banks, from which the Russian Federation found itself isolated.
“These are all the consequences of Brexit - before the vote, many investors went into cash, and then started buying assets again. We also bought Russian Eurobonds on Friday, when all markets were falling,” Igor Kozak, portfolio manager at TKB Investments Partners, told RBC. – The manager of Europe’s largest investment company Amundi with assets worth $1 trillion told Bloomberg about plans to increase investments in dollar bonds of Russia and Brazil. Peter Schottmüller, head of emerging markets debt markets at Deka Investment GmbH, told the agency that he also selected assets that were least dependent on Brexit. “We have increased our position on Gazprom, since the Russian state corporation and Brexit are almost in no way connected,” he clarified.”
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