Weak ruble may continue supporting Russian shares on Thursday

MOSCOW, Aug 31 (PRIME) -- The Russian stock market may start the Thursday trading session with an increase as the ongoing depreciation of the ruble may help the national shares, analysts said.

“The MOEX Russia Index rose by 0.04% to 3,212.68 (on Wednesday), while the U.S. dollar-denominated index RTS fell by 0.75% to 1,052.06 … Since pressure on the ruble is rising and that the ruble is setting new lows, we should be ready for (the MOEX Russia Index) to hit new records around 3,280–3,290,” BitRiver’s financial analyst Vladislav Antonov said.

The increase of the key rate to 12% and the agreements between the government and exporters had a temporary impact on the currency market, but the ruble will continue losing every bit of ground against every currency without additional support from the central bank. If the ruble falls to 98.30 per U.S. dollar before September 5, the way for the ruble to fall to 105 per U.S. dollar until September 11 will be open, Antonov said.

But financial platform Banki’ru.s senior analyst Bogdan Zvarich said that the Russian market may continue consolidation at current levels and test the support level of 3,200 because the market lacks serious drivers sales.

“Yesterday, the MOEX Russia Index tested the support level (of 3,200) from above, and managed to regain losses after that. Today, the index may try to fall below the level once again, but we see no reason for our market to move strongly in that direction. It is worth noting that if the index holds above the support level, it will create the ground for further growth with the closest target of 3,400,” he said.

The external background for the market is mixed at the beginning of the day, with the leading Asian bourses losing up to 0.6%, the futures for the main U.S. stock indices gaining up to 0.2%, and the Brent oil prices edging up only 0.1% trying to hold the position above U.S. $85 per barrel, Zvarich said.

“The MOEX Russia Index may either try to climb above 3,220 and pave the way toward 3,300, or it could try to switch into a downward correction,” head of Alor Broker’s investment consulting department Alexei Antonov said, adding that the ruble’s devaluation may cause speculative purchases in the shares of the Moscow Exchange, oil companies, and steelmakers.

Deputy Prime Minister Alexander Novak said yesterday that the government was considering Lukoil’s idea of a share buyback from foreigners. This is a positive moment for the company, and provides additional support to the securities given the high dividend expectations. Novak also said that other energy companies had made similar suggestions, but the authorities will not speed up the process in order to avoid exerting more pressure on the ruble, he said.

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