MOSCOW (Reuters) - Russia’s stock market is likely to remain under pressure this year from U.S. sanctions and global trade conflict that could hit other emerging markets, a Reuters poll found.
Russian financial markets proved vulnerable to U.S. sanctions and threats of more penalties to punish Moscow for what Washington calls “malign activities.”
The rouble-based MOEX stock index .IMOEX is seen ending this year at 2,230 points, according to the median forecast of 11 analysts and economists polled by Reuters.
That is slightly below Wednesday’s close of 2,348, and closer to the lower boundary of the forecast range of 2,100 to 2,550 points.
“The main risk for the Russian stock market ... will certainly be new American sanctions,” said Yelena Kozhukhova, an analyst at Veles Brokerage.
Washington has already imposed sanctions against Russia tied to an attack on a former Russian agent in Britain. A second batch of penalties will be imposed unless Russia gives “reliable assurance” that it would no longer use chemical weapons and allow on-site inspections by the United Nations or another international observer group.
“Financial sanctions pose the most serious danger for the Russian market and investors’ mood. If they are imposed, stock markets and the rouble will be hit again,” Kozhukhova said. “Otherwise, the mood on the Russian market could improve.”
The dollar-based RTS index .IRTS was predicted at 1,129 points by the end of this year, the poll showed, with forecasts ranging from 970 to 1,350. RTS closed Wednesday at 1,085.
Analysts were more pessimistic about the future of Russian stocks than they were in a similar poll in late May, having contemplated a massive sell-off in August caused by the U.S. sanctions.
“After the U.S. voiced intentions to step up sanctions pressure on Russia, prospects for RTS index growth look vague,” said Oleg Shagov, head of research at investment company Solid.
While Evgeny Koryukhin, an analyst with Alor Brokerage, said “if some investor wants to deal with toxic assets, then the Russian market could provide such an opportunity.”
Looking into 2019, Promsvyazbank analyst Evgeny Loktyukhov said the market could be vulnerable to risks of Brent crude prices sliding back to the range of $50 to $60 per barrel amid global trade wars and an expected continuation of capital outflow from emerging markets.
Writing by Andrey Ostroukh, editing by Larry King