The collapse in oil prices and negative external background left no chances for the Russian market, which experienced the largest drop since March in trading on Monday. The longest period of fall in a year – four days in the red in a row – sent the Russian market to lows since the end of May, cutting off 938 billion rubles from the capitalization of blue chips.
How long can the fall of the Russian market last? What Russian stocks look the most promising to buy on a drawdown? Artem Tuzov, Executive Director of the Capital Market Department of IC “Univer Capital”, answered the question of Fortrader magazine.
– The Moscow Exchange Index now shows a significant correlation with the American market. Not only does the Russian market fall for 4 days in a row, the same is happening with the S&P 500 index. If the index continues to fall, we can expect a continuation of the fall in the Russian market. But recently, all corrections in the index are being bought out by the market and it is more likely that by the end of this week the indices will again move to growth.
On a prolonged market decline, if it happens, you can focus on three strategies:
- Buying excellent assets at the right price… These assets include Sberbank, Gazprom, Rosneft and other Russian blue chips. In the event of a protracted decline in markets, foreign investors, for whom the Russian market is not a key one, will be forced to sell assets in Russia in order to maintain their shoulder positions in international markets. This is worth taking advantage of.
- Buying assets that grow during the crisis… For Russian investors, the simplest investments will be the purchase of gold and foreign currency.
- Purchase of assets in which corporate events are expectedthat do not depend on the market and which could lead to the disclosure of the value of the issuer. These assets include Evraz and Raspadskaya, Rusal and EN +, MTS. All these issuers are planning to reorganize and spin off some of the assets into a separate organization and their quotes may be out of touch with the market situation.