The Russian stock market is going through far from the best of times. Trading participants' sentiment remains under pressure from a complex of factors that together create an extremely uncomfortable environment for investments. In my latest assessments, I draw attention to the fact that the current situation is not just a correction, but systemic strain that requires investors to exercise particular caution and reconsider their strategies.
Key factors putting pressure on the market
First and foremost, the extremely tense geopolitical situation is weighing on quotes. This is a fundamental backdrop that cannot be ignored. The second, no less significant factor, is the persistent inflationary risks in the economy. These macroeconomic conditions create a toxic mix in which even positive corporate news often fails to be properly reflected in prices.
In addition to the general macroeconomic conditions, technical factors also influence the dynamics of the indices. In particular, we are observing a classic dividend gap, when securities become cheaper after the ex-dividend date by the amount of the payout. But a more alarming signal is the forced closure of positions held by retail investors using leverage. When prices decline, such positions are closed automatically, which temporarily intensifies the fall and creates a snowball effect.
Separately, it is worth highlighting the economic reasons behind the cheaper valuation of a number of securities. The Russian market is effectively isolated from foreign investment, which forces companies to increase debt. However, not all issuers manage to service it. We see defaults, but it is important to emphasize: this concerns companies far from the first tier, which, nevertheless, does not reduce the overall level of anxiety.
The market is not a roulette wheel
In recent years, a series of unlikely risks have materialized in the market, which has given reason to compare the venue to a casino. I categorically disagree with this comparison. Yes, "black swans" have occurred — the blocking of client assets in 2022 and sanctions against financial market participants, which were impossible to calculate in advance. But apart from that, events in the market are logical.
In a casino, there is no cause-and-effect relationship: the bet, the wheel, the ball — and that's it. The market, however, operates on different principles and follows patterns that are amenable to analysis and calculation. The higher the promised yield, the higher the risks for the investor. Those who carefully monitor the economy and business are quite capable of forecasting how events will unfold. That is precisely why a thorough assessment of risks helps minimize losses during periods of high volatility.
AI: an assistant, not a replacement
The fashion for artificial intelligence has reached finance as well, but talk of completely displacing humans is premature. When algorithmic trading appeared, many also decided that the exchange would do without people, but that did not happen. The future undoubtedly belongs to AI, and in the financial sphere it will occupy a prominent place.
However, current AI models make mistakes too often and produce fabricated answers even in simple everyday tasks. About two-thirds of financial organizations already use or plan to implement AI, but those who use it admit: the results still have to be manually verified. The Bank of Russia has developed a code of ethics for market participants that ensures the safe use of AI and data protection. AI noticeably increases productivity through routine operations, but so far it does not relieve humans of intellectual labor.
My conclusion: the current situation in the Russian market is a test of maturity for investors. The ability to distinguish market patterns from chaos and to assess risks competently is becoming the main competitive advantage. Full automation and blind faith in technology is a path to losing capital, not to increasing it.