The Russian stock market: Foreign investors stepped up purchases
Russian market will open a small decrease due to the reduction of futures for the major Asian, European and American stock indices 0.9, and 0.1% and 0.8% and 0.3-0.5% respectively. The VIX jumped 3 percentage points from 17% to 20%. The dollar index has strengthened by 1.2 percentage points to 90 points since the beginning of the week. The yield on the us 10-year government bonds increased by 6 b.p. to 2.95%. Thus, investors reacted to the publication of the January FOMC minutes, the fed.
The Committee notes that the labour market continues to strengthen, there is real GDP growth, growth in new home sales, an increase of hourly wages remains modest, however, consumer sentiment remains optimistic, real disposable personal incomes allow us to speak about the further stable growth of real PCE in the near future. Therefore, the members of the Committee agreed that in the short-term economic perspective increased the likelihood that would be appropriate phase-growth path of fed funds rate.
However, despite the neutral dynamics of oil prices due to the strengthening dollar and a weak Outlook API, according to which crude oil inventories in the U.S. fell by 907 thousand Barr., and in Cushing by 2.6 million barrels, the Russian market receives an influx of foreign liquidity. Therefore, the index Masuri jumped to 2320 points and was in the opposite situation in the global market and OFZ yield curve fell below the level of 7% on short and average periods. We believe that foreign investors come into the market in expectation of increased sovereign rating of the Russian Federation from the current level of “BB+” up to the last stage of investment level “BBB-“.
In fact it will provide a further influx of foreign liquidity on the Russian market, as a number of foreign funds will have the right to invest in Russia due to the fact that the country will have an investment grade rating from two international rating agencies. However, we believe that the rating will not increase because of the threat of new sanctions of the USA against Russia. Recently, the US Administration reminds us of this repeatedly.