Russian stocks to slide on rating downgrade by Moody’s

MOSCOW, Feb 24 (PRIME) -- The Russian stock market will demonstrate a strong negative trend at Tuesday opening on a recent downgrade of the country’s credit rating to junk by Moody’s, analysts said.

“The local market will reflect the decision by rating agency Moody’s made on Friday (February 20) to downgrade Russia’s sovereign credit rating to speculative level at the first minutes of the trade. It is not ruled out that the MICEX will sink below the 1,750 level amid the sell-offs in the morning,” Vitaly Manzhos, analyst at ITinvest said.

The sovereign rating downgrade will trigger a series of downgrades of Russian companies, and since the country’s corporate debt is much higher than the state debt, this rating decision will have dire consequences for many companies and for the ruble exchange rate, IT Invest analyst Vasily Oleinik said.

Investors will be selling Russian assets at least during several next days, he said.

The U.S. stock futures were in the green zone on Tuesday in the morning, while Brent slid 0.10% to U.S. $58.84 per barrel as of 9.17 a.m. Moscow time, and the overall background at the start of the Russian trading week is moderately negative, Manzhos said.

Russian stocks will continue decreasing on Tuesday in the evening if oil prices keep on falling, Ilya Frolov, analyst at Promsvyazbank, said.

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