Russian stocks seen neutral on US–China uncertainty

MOSCOW, May 21 (PRIME) -- The Russian stock market is seen starting the trading session with marginal changes on Tuesday on the back of a general uncertainty concerning the U.S.–China trade conflict, analysts said.

“The developing markets are in general under a pressure of worries concerning possible outcomes of the “trade wars” (the MSCI EM Index has fallen by 7.9% since the start of the month) but injection of liquidity to the Chinese financial sector through transactions by the People’s Bank of China for 80 billion yuans (which is slightly less than U.S. $12 billion) somewhat supported the market,” Olma senior analyst Anton Startsev said. 

Promsvyazbank analyst Mikhail Poddubsky said that after an escalation of the conflict, China and the U.S. made a small step to renew the dialogue as the U.S. Commerce Department gave Huawei and its 68 affiliates a temporary license to support the existing networks and update software within 90 days.

Poddubsky also said that an overall rhetoric by Chairman of the U.S. Federal Reserve System (Fed) Jerome Powell at a speech on Monday may signify easing of monetary policies.

But Russian investors were seriously worried over decreased growth rate of the gross domestic product (GDP) in January–March and some of them saw signs of looming recession, according to Georgy Vashchenko, head of investment company Freedom Finance’s department for trade operations on the Russian stock market.

 Startsev said that the technical analysis data keep in force a scenario of short-term consolidation of the RTS index close to 1,250. Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that the MOEX Russia Index can rise by 0.1–0.3% to 2,575–2,580. The levels of 2,570 and 2,560 will act as the support ones and the levels of 2,590–2,600 as the resistance ones.

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