The Russian stock market is experiencing one of the longest corrections in recent years. The decline has been ongoing for 17 consecutive weeks, and so far, no industry experts are willing to claim that the bottom has been reached. The market situation resembles not so much stagnation as a classic "bear phase," where assets depreciate without clear negative news—simply due to a lack of demand.
No Bottom in Sight: Pessimism Dominates
The current decline is not a "slow fade"—it is a full-fledged correction. The Moscow Exchange index has corrected by nearly 25% over 17 weeks. Exclusively pessimistic trader sentiment prevails in the market. A rate cut by the Central Bank in the second half of the year is likely, but its magnitude will probably not be sufficient to reverse the trend.
Dividend payments, which many expected as a growth catalyst, will likely only act as a temporary brake on the decline. After dividends are credited, local purchases are possible, but their volume is clearly insufficient to change the trend. New IPOs expected by the end of the year also do not inspire optimism. Companies are going public not for development, but to salvage their financial positions—these are "lifeline" placements, not quality growth stories.
Key Drivers for the Second Half of the Year
The main factor determining market dynamics is the key interest rate and the overall economic situation. The rate currently has the strongest impact on investor sentiment, not only in the bond market but also in the stock market. Dividend-paying companies will attract attention, especially those offering yields at or above the key rate. However, amid a negative economic backdrop, they will only perform better than the market, but confident growth should not be expected from them.
As for new IPOs, the experience of recent years shows that virtually no placement has generated income for investors. Most securities trade below their offering price. High uncertainty regarding the rate will significantly reduce the number of companies ready to go public.
Tokenization, Brokerage Apps, and Strategies
The surge of interest in brokerage apps is not linked to an influx of new retail investors, but to restrictions from foreign platforms. It is impossible to assess real demand based on this indicator. Organic growth exists, but without significant changes.
I am extremely skeptical about tokenizing stocks through crypto infrastructure. The main issue is the accounting of rights. Being a shareholder with an entry in the registry and owning tokens are fundamentally different things. Tokenization rather opens opportunities for gray capital and carries significant risks for the American system. Tax breaks exist, but they hold no value for large capital. For small portfolios, this might be more interesting than direct exchange trading, but for large ones, it adds extra risks.
My recommendation for a retail investor with a 2–3 year horizon:
- Bonds — the foundation of the portfolio, with a lion's share in OFZs (short and medium-term), with a possible long-term portion depending on the risk profile.
- Stocks — only a small portion, with careful and regular purchases. No one knows in which year the bottom will be—this year, next, or in 3–5 years.
- Gold — definitely not, it is an absolutely non-investment and uninteresting asset.
- Cash — acceptable as a waiting position, placed in deposits, overnight, or repo transactions.
Analytical conclusion: The Russian market is in a deep correction, and hoping for a quick reversal is premature. The key factor remains the Central Bank's monetary policy. Investors should focus on defensive instruments—bonds and cash—and only cautiously build positions in stocks of companies with sustainable businesses and stable dividends, considering geopolitical risks and the macroeconomic backdrop.