The Russian stock market is experiencing one of the longest corrections in recent times. The decline has been ongoing for 17 consecutive weeks, and according to analysts, it is still premature to talk about hitting a bottom. The index has corrected by nearly 25%, and this is not a "slow fade" but a full-fledged bearish trend developing almost in the absence of negative news. The market is falling simply because there are no buyers.

No Bottom in Sight for the Coming Quarters

The current situation can hardly be called stagnation. It is precisely a bearish phase, where investors are not just waiting but actively exiting positions. In the next three months, the decline will likely continue. Even a possible key rate cut in the second half of the year is unlikely to be a super-positive factor—its magnitude will probably disappoint the market.

Dividend payments, which many are pinning their hopes on, are more likely to act as a brake on the decline rather than a growth driver. After dividends are credited, local purchases may occur, but their volume will clearly be insufficient to reverse the trend. New IPOs expected by the end of the year will also not add optimism. Based on experience from recent years, most offerings have not generated returns for investors, and many securities are trading below their issue price. Companies are going public not for development but as a "lifeline" for their finances—these are generally not the highest quality assets.

Key Drivers for the Second Half of the Year

The main factor for the market remains the macroeconomic situation and the dynamics of the key rate. In the absence of geopolitical shocks, it is the rate that will determine sentiment in both the bond and stock markets. Dividend stocks will attract attention, especially those offering yields at or above the rate level. They may perform better than the market, but confident growth should not be expected—an inflow of assets into them will not be able to turn the situation around.

New IPOs amid high uncertainty over the rate will be sporadic, and their quality will remain questionable. Investors should be extremely selective.

Tokenization and Strategy for the Retail Investor

The surge of interest in brokerage apps, which some attribute to an influx of retail investors, is actually driven more by restrictions from Russia and foreign platforms. It is impossible to unambiguously assess real demand based on this indicator. Overall, there is organic growth, but without significant changes.

Tokenization of real assets is a global trend, but in Russia, there is no movement toward tokenizing foreign stocks yet. The main problem is the accounting of rights. Ownership through tokens is fundamentally different from the status of a shareholder in the registry. For large capital, this is more of a risk than an advantage. For small portfolios, it may be more interesting than direct exchange trading, but tax breaks and other preferences hold no value for big money.

Recommendations for the retail investor with a 2-3 year horizon:

  • Bonds — the foundation of the portfolio. The lion's share in OFZs, short and medium-term, with a possible long-term portion depending on the risk profile.
  • Stocks — only a small share, with careful and regular purchases. No one knows in which year the bottom will be reached—this year, next year, or in 3-5 years.
  • Gold — definitely not. This is an absolutely non-investment and uninteresting asset.
  • Cash — acceptable as a wait-and-see position, placed in deposits, overnight, or repo transactions.

I consider cryptocurrency over a 10-year horizon to be an extremely toxic asset. The development of AI and the construction of the largest data center in the US could make crypto wallets worldwide vulnerable. The situation will only change if they learn to tie the asset to a person, but then the very essence of crypto is lost.

Analyst's comment: The market is in a phase where the inertia of decline is stronger than any attempts at a rebound. Investors should prepare for a prolonged period of low returns in stocks and focus on capital protection through bonds and cash instruments. The main risk now is not missing the bottom, but losing patience and making an emotional purchase in hopes of a quick reversal.