Russian stocks to fall as coronavirus expands outside China

MOSCOW, Feb 27 (PRIME) – The Russian stocks are likely to contract on Thursday on the flight from risky assets after a recent expansion in the number of people infected with the new coronavirus outside China, analysts said.

“Today downward correction of the RTS Index is likely to continue at the beginning of the trading session under the influence of the external background. The ‘viral’ factor still exerts a negative influence on investor risk appetite,” investment company Olma’s senior analyst Anton Startsev said.

“This time volatility in the futures for the Western stock indices started on the reports that the infection cases unconnected to the initial outbreak area were discovered in the U.S., and due to a rapid increase in the cases of infection outside China.”

The U.S. stock indices closed lower on Wednesday, while futures for the indices fell on Thursday morning. The Asian floors show mixed dynamics, he said.

“The current situation triggers further concern about the coronavirus impact on the global economy, provoking sales of risky assets and a flight for quality…In these conditions, we expect a negative opening of the Russian stock market. Sales will prevail in a wide range of securities, leading to … contraction of the MOEX Russia Index to the range of 2,950–3,000,” Bogdan Zvarich, senior analyst at Promsvyazbank, said.

Alor Broker’s analyst Alexei Antonov said that investor fears also pushed the oil price down to U.S. $52 per barrel, and further contraction to $50 is very likely.

“It may be a good thing, as low prices will force participants of the OPEC+ deal to reduce oil output significantly next week. But low oil prices will obviously worsen performance of the oil shares, excluding preferred shares of Surgutneftegas that people buy during ruble devaluation as the company has a large safety bag of foreign currency,” Antonov said.

Zvarich also said that investors will focus on the U.S.’second estimate of the country’s gross domestic product, orders for durable goods, and jobless claims, he said.

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