Russian stocks may rise as reaction to geopolitical risks eases

MOSCOW, Nov 27 (PRIME) -- Russian stocks may rise on Tuesday morning on improved investor mood as geopolitical risks have not escalated rapidly, analysts said.

“A slight rebound of the RTS Index is possible today at the beginning of trade, as the initial market reaction to the changes in geopolitical risks was too nervous. Still, the impact of the geopolitical factor persists, so the RTS Index is unlikely to show a steady upward trend,” Olma senior analyst Anton Startsev said.

Mikhail Poddubsky, Promsvyazbank’s senior analyst, said that the seizure in the Kerch Strait of Ukrainian ships and marines pressured the Russian market on Monday, but general reaction of the Western states was composed, as they condemned the events, but called for de-escalation, and said no overly tough words.

“As to the situation at the global markets, the risk appetite there is improving slightly at the beginning of the week. Market players are still waiting for the news from the G20 summit later this week…The excitement about the upcoming (U.S.–China) meeting is fueled constantly, and if they sign at least a framework agreement and if investors believe that the duties will not be raised at the beginning of 2019, the risk appetite at the global markets may improve significantly,” Poddubsky said.

But Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that detention of the Ukrainian ships is a very worrying signal for all traders albeit balanced by good results of trade in the U.S. stocks on Monday.

“We expect the MOEX Russia Index to open in a neutral way with a moderate change within 0.3% close to 2,310. The levels of 2,300 and 2,290 will remain the closest support, while 2,320 and 2,330 will act as significant resistance,” Manzhos said.

Manzhos also said that investors will track the release of the November consumer confidence index by the U.S. later in the day, while Startsev said that local players will focus on financial reports by metals and mining group Mechel and multi-industry holding Sistema.

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