The Russian stock, foreign exchange and debt markets on Thursday were at the mercy of almost frontal sales against the background of growing geopolitical risks due to the arrest of Alexei Navalny and expectations of protests, calls for which have flooded social networks.
At 17.37 Moscow time, the Moscow Exchange index is down 1.08%, and the RTS index is down 1.49% against the backdrop of the amicable fall of almost all blue chips.
Sberbank loses 1.89%, Gazprom – 2.3%, Rosneft – 2.5%, LUKOIL – 1.71%, Norilsk Nickel – 0.43%, Yandex – 1%.
Of the large companies, only Rostelecom and Sovcomflot are becoming more expensive, and then by scanty amounts – 0.1% and 0.06%, respectively.
The decline in the Russian government debt market resumed: the RGBI index, which tracks OFZ prices, is losing 0.18% and is on the verge of a new minimum since April last year.
Following the debt market, the ruble is weakening, despite the tax period forcing exporters to sell foreign currency for payments to the budget.
The dollar adds 47 kopecks compared to the opening of trading and 22 kopecks versus Wednesday and is trading at 73.74 rubles. The euro rose in price by 57 kopecks, to 89.53 rubles, and earlier during the session reached 89.92 – the maximum for the week.
Russian assets are under pressure from the “geopolitical” noise associated with the events around Navalny and possible protests, “Loko-Invest analysts write.
The rally on January 23 for the release of the oppositionist blew up the Russian TikTok: hashtags # freedomNavalny, # 23 January and others like them gained more than 200 million views by 11 am on January 21, according to Open Media.
According to Der Spiegel, the European Parliament has prepared a resolution demanding EU leaders to impose sanctions against Russia for Navalny and stop the Nord Stream 2 project.
“By itself, this fact is not negative for the ruble, since huge funds have already been spent on construction, and future revenues were clearly not taken into account in forecasts. But the general trend to limit economic cooperation with the Russian Federation, if it is continued, will negatively affect the medium / long-term prospects of the ruble and the entire economy, ”says Dmitry Polevoy, Investment Director of Loko-Invest.
German Chancellor Angela Merkel joined Western leaders in demanding the release of Navalny on Thursday. “The federal government thinks that would be correct. And very urgent, ”she said at a press conference in Berlin.
The market is reacting to the growing uncertainty after the change of administration in Washington, and the next calls of the European Parliament are quite consistent with the American agenda regarding the Russian Federation, so we can talk about an increase in the likelihood of joint sanctions, said leading analyst at Otkritie Broker Andrei Kochetkov.
Meanwhile, foreign investors began to leave the stock market, actively buying Russia at the end of last year.
Over the past week, exchange-traded funds focused on the Russian Federation have withdrawn $ 14 million. “Outflows are small, but interesting is the fact that optimism about Russia in particular has evaporated,” analysts from BCS Global Markets write, adding that “next week we can expect an increase in volatility and a market correction”.
“Market participants are confident that the new political alignment in the United States will lead to new sanctions, the only question is their toughness,” said Denis Poryvai, an analyst at Raiffeisenbank.
In a tough scenario – with a ban on the ownership of ruble-denominated public debt or disconnection from SWIFT – Russia will face a capital outflow of $ 70-100 billion, which will collapse the ruble by 10-15 rubles against the dollar, he said.