The ruble is losing support, the Russian market went in the red zone

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Reacting to the deterioration in the external background, the Russian market plunged in the red zone and continues to remain under pressure in the second half of the session on Tuesday. Thus while the extent of drawdown not beyond reasonable correction, but given the risks from outside, the pressure may gradually increase. Index Mosberg and RTS in the middle of the day bear losses in the range of 1%.
The focus remains trade war between the US and China, which is likely to deteriorate against the background of the situation in Hong Kong. Mainland China is already thinking about military intervention against the backdrop of ongoing protests in Hong Kong. And the markets are growing speculation of dissatisfaction with Beijing that Washington is if not support, then encouraging these protests. It is not surprising that in such circumstances risky assets, including Russian, are not in demand.
Meanwhile, the initial pressure on the ruble eased somewhat. Approaching the highs from early April in the area 65,60 rbl., the dollar has receded, but continues to hold above the mark of 65 rubles, which speaks about the preservation of downside risks to our currency, especially in the context of the inability of the oil to attract buyers.
If in the next few days tensions in the world subsides, we should expect further assets sales in the growing segment. In the case of the ruble such a scenario threatens to move to new lows and the growing threat of violation of the integrity level 66 RUB, especially Brent, after the consolidation will resume its decline towards the level of 55 dollars per barrel.
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Arseniy Dadashev,
Director,
Academy of management Finance and investment