Russian stocks to fall on concerns about new US sanctions

MOSCOW, Aug 9 (PRIME) -- Russian stocks are likely to fall on Thursday morning over possible new U.S. sanctions, analysts said.

“The first reaction to the announcement of the U.S. sanctions against Russia looks too excessive, but the market may remain under pressure of sales even today. Mounting uncertainty results in a higher discount on market multipliers with which Russian shares trade against foreign peers,” Anton Startsev, a senior analyst at investment company Olma, said.

On Wednesday, Russian media released an allegedly full text of a bill on new U.S. sanctions, including a full ban on operations of seven Russian banks, including major state-owned banks Sberbank, VTB Bank, Vnesheconombank (VEB) and Promsvyazbank. The news resulted in a national market slump and in the ruble falling to a two-year low against the U.S. dollar.

But Startsev also said that contraction of the U.S. dollar-denominated Russian shares will be partially compensated by the fall of the ruble.

“The sanction theme is again in focus of the Russian market. Investor worries are fair, as the possible measures include restrictions for state banks…Many players of the market don’t fully understand the potential consequences of the sanctions. This uncertainty ultimately brings fear, and market fears translate into collective sales,” Vasily Karpunin, an analyst at BCS Broker, said.

Mikhail Poddubsky, a senior analyst at Promsvyazbank, said that the recent news show the will of the U.S. to raise the sanction pressure on Russia seriously. “Nevertheless, the significant weakening of the ruble provides support to the MOEX Russia Index and to Russian exporters, as there are no tough sanctions against the energy sector, so we expect the index to hold around 2,280–2,300,” he said.

End