Stock markets await the US elections and the appointment of Donald trump with the President of the Russian Federation
In the near future will take place two events, which will have, as written by Westerners, “the dramatic implications of the ruble”. Midterm elections in the U.S. Congress will be held tomorrow. Will be fully re-elected house of representatives (435 members) and approximately one third of the Senate (35 of the 100 members). The meeting of Putin and trump will be held in Paris on November 11. Probably until November 11, the new sanctions should be expected. The success of the Democrats in the elections, probably, should be considered as negative for Russia. In this scenario, the risks of new sanctions increase.
The Bank of Russia has already declared that, probably, will return to currency market intervention. However, without instructions from the Kremlin, from our point of view, this is unlikely. RF Central Bank targets inflation, not exchange rates. And, of course, the fall of the ruble is beneficial and budget, and exporters. We are not very surprised if in the negative scenario the ruble will fall and the dollar will be trading around 72 rubles.
However, we believe that the U.S. sanctions pressure on Russia has come to the red line. Russia’s international reserves comparable to the gross external debt. Russia is quite the response, could impose a moratorium on payment of foreign debts.
But most importantly – more. We continue to believe that the collapse of the U.S. stock market and as a consequence of the sale of shares and currencies in emerging markets is a matter of time. Though perhaps this story is not 2018, and 2019. In addition to the cache and we have no recommendations.
In addition to policy for the ruble and stocks of Russian companies, an important factor to the end of the year remain on oil prices, which remain at a fairly comfortable level.
The Director of analytical Department,