The Russian stock market on its 17th week of decline: analysis of the bottom and prospects
The Russian stock market is experiencing a prolonged correction, and it is too early to talk about reaching the bottom. Despite the absence of new negative triggers, the Moscow Exchange index has already corrected by nearly 25% over the past 17 weeks. This is not a slow decline, but a pronounced and sustained downturn that analysts call a "bear phase."
Bottom Not Yet Reached: Expert Opinion
The current market situation is not stagnation, but a classic bear phase where selling occurs without visible external reasons. Demand for stocks is virtually absent, and the decline is likely to continue over the next three months. Even if the key rate is lowered in the second half of the year, its effect may be insufficient to reverse the trend.
Dividend payments, traditionally seen as a driver, may only slow the decline under current conditions, but not turn the situation around. After the closure of registries, local purchases are possible, but their volume will not be enough for sustainable growth.
Experts view initial public offerings (IPOs) expected by the end of the year with skepticism. In the current reality, many companies are going public not for development, but to save their finances—this is more of a "lifeline" than an opportunity for growth. Buying such securities is risky.
Key Drivers of the Second Half of the Year
Economic situation and the Central Bank rate are the main factors. If there are no sharp geopolitical changes, monetary policy will determine investor sentiment. High uncertainty about the rate reduces the attractiveness of the stock market.
Dividend-paying companies will remain in focus. Issuers that pay dividends at or above the key rate will perform better than the market. However, one should not expect confident growth from them—they will only be able to soften the decline.
New IPOs—as experience in recent years shows, most offerings have not generated income for investors, and many securities trade below their offering price. In conditions of high uncertainty, the number of those willing to go public will decrease.
Tokenization and Strategy for Investors
The surge of interest in brokerage apps is more likely related to restrictions on access to foreign platforms than to an influx of new retail investors. No real boom is observed.
Tokenization of stocks through crypto infrastructure raises skepticism. The main problem is the accounting of rights: owning a token does not equal owning a share in the registry. This creates risks for large capital and may only be interesting for small portfolios. Tax preferences for such instruments currently have no practical value for serious players.
For a retail investor with a 2–3 year horizon, the optimal strategy is conservative. The portfolio should be based on bonds (primarily OFZs), with stocks only a small part, accompanied by regular but cautious purchases. Gold as an investment asset is not interesting at this stage. It is acceptable to hold cash in deposits or repo transactions as a wait-and-see position.
Cryptocurrencies over a 10-year horizon remain an extremely toxic asset. The development of AI and the construction of large data centers in the US could make crypto wallets vulnerable. The situation will only change if the asset is tied to a person, but then the very essence of crypto is lost.
My view: The Russian market is in a phase of structural restructuring, and the current decline is not just a correction, but a reflection of fundamental problems. Investors should prepare for a prolonged period of low returns and shift focus to defensive instruments. Buying on the dip is possible, but only within a long-term strategy and with a clear understanding of the risks.