The Russian stock market has not yet justified the adage “sell in May and go away” – the Mosbirzh index has renewed its record high amid rising prices in the commodity sector and a favorable external background. At the same time, the turnover of trading in the inter-holiday week was uncharacteristically high for this period, which underlines the increased interest of investors in Russian shares.
Can you name the stocks that will become the favorites of the Russian market in May? Andrey Vernikov, Head of the Investment Analysis and Training Department, IG UNIVER Capital, answered the question of Fortrader magazine.
– Large trading turnovers often occur at trend peaks – local highs or lows or trend reversal points. In this case, large volumes indicate the growing popularity of trading among the broad masses and that for some it is a pre-holiday week, but for some it is a working week. Many employers did not pay for the inter-holiday week, so it cannot be said that the whole country had long holidays.
By market. In the US, we see a correction in high-tech stocks and it spilled over to domestic high-tech stocks such as OZON or MAIL.RU. But the backbone of our stock indices are not they, but the shares of the energy sector. There is no sign of any correction, because oil prices are in the “bull zone”. In addition, investors hope that the June meeting of the leaders of the United States and Russia will serve to defuse geopolitical tensions. The RTS index and the Moscow Exchange index are in an upward channel. In order for them to start falling, the S&P 500 and the emerging markets index must begin to decline. So far, there are no reasons to launch a correction mechanism in shares of traditional industries. In addition, the adage “sell in May and go” has not worked well for the past seven years.
What will happen next? I think that in a month the Russian indices will be at or below these levels. Information about the meeting place and the agenda between Putin and Biden will trigger a market correction. In this regard, it is not necessary to speak about the favorites of growth. Better to talk about stocks that can show resistance to decline.
It seems to me that the success of the mass vaccination against coronavirus is inevitable, and in this regard, the cooling of investors to the shares of Zoom Video Communications, Inc. and the like is a long-term process.
On the market correction, which is likely to be in early summer, it is worth buying shares of the oil and gas sector (Gazprom Neft, Rosneft, Gazprom), shares of companies with growing businesses (Polyus, Moscow Exchange), shares of companies related to food production are also interesting. directly or indirectly, for example, FOSAGRO. A 15% correction on the RTS index would not surprise me.