The Moscow Exchange index dropped below 2,500 points against the backdrop of growing pressure from several systemic factors at once, which reflects the deterioration of the stock market of the aggressor country of the Russian Federation. This was reported by the international financial portal Investing.com.
The key negative factor, as indicated in the material, remains the slowdown of the Russian economy: the GDP growth forecast has been reduced to 0.4%, while the budget deficit is increasing, which indicates a deterioration in macroeconomic stability and limited growth potential. Against this background, the Bank of Russia’s key rate remains high, due to which capital continues to flow from shares to debt instruments with a yield above 14%, reducing the attractiveness of the stock market.
Additional pressure is exerted by the strengthening of the ruble, which reduces the ruble revenue of export-oriented companies – the key issuers of the index. Even high oil prices will not compensate for this effect, since currency revaluation can wipe out part of export revenues.
The situation is aggravated by the geopolitical factor: Russia’s war against Ukraine continues without signs of de-escalation, and the negotiation process remains at a dead end. At the same time, there remains the risk of increased sanctions pressure from the EU, including possible new packages of restrictions, which further reduces investor interest in Russian assets, the material says.
Taken together, the market is experiencing pressure in three directions at once – macroeconomic, currency and geopolitical. This leads to a decrease in liquidity, increased investor caution and increased expectations of further volatility and a possible continued decline in quotes.
