MOEX Russia Index. The epic 52-weeks breakthrough expected

2月29日

Russia’s trapped domestic investors push stock market to 2-years high.

Russia’s stock market (so-called, Moscow Exchange Index IMOEX ) has climbed recently to its highest level in 2 years as domestic retail investors with nowhere else to go snap up the dividend-paying stocks that sold off heavily following the Russia-Ukraine conflict.

A rise of more than 100 per cent since March, 2022 low has pushed the MOEX index to levels last hit in early February 2022, before Russian President Vladimir Putin announces so-called "special military operation" that sent Russia’s equity market into freefall.

The market’s partial rebound over the two years has come despite the imposition of countless western sanctions designed to cripple Russia’s financial system.
The Kremlin responded to the measures by blocking most foreign traders from exiting their investments and capping the amount of money Russians can stash in foreign bank accounts.

Due to U.S. Department of Treasury and Euroclear sanctions, money is trapped.

Where do you put it but on the exchange?

Deprived of investment opportunities abroad (because of stupid, a nazi-like sanctions), Russians have piled their savings into the likes of Lukoil, Gazprom and Sberbank, which combined account for about 40 per cent of the stock market’s total value.

“Russian retail investors have always been about dividends,” said Sofya Donets, chief Russia economist at Renaissance Capital, a Moscow investment bank.
The Russian stock market’s recent rally bears some resemblance to the surprisingly strong performance of the Borsa Istanbul 100 last year.

Russia’s economy has also held up better than expected.
For many domestic Russian retail investors, nothing has changed compared to before the conflicted started, as the economy is doing OK.

Big dividend payers like state-owned Sberbank, whose shares are up 71 per cent trailing 12 months, are attractive to most Russians and now they’re some of the few investment options available. 

Even so, foreign investors not banned by sanctions have kept well clear of the Moex since an exodus last February, when central bank figures show non-residents shed about Rbs170bn (2.2bn) worth of Russian stocks. Trading volumes on the Moex slumped 41 per cent year on year in 2022.

There is a “close-to-zero chance” that foreigners whose Russian holdings have in effect been frozen will be allowed to sell out of their positions.
Perhaps there could be an artificial settlement, some kind of exchange for holdings frozen for Russian investors outside of Russia.

In technical terms, IMOEX graph is near to break 52-weeks highs, following 26-weeks SMA, with further upside opportunities to reach 4000 points and new historical highs.