Russian stocks experienced a significant decline on Monday, plummeting over 4% and reaching their lowest point in more than three years. This downturn extends a 15-week downward trend following last week’s modest interest rate cut by the Central Bank, indicating that high borrowing costs may remain longer than previously anticipated by investors.
During the afternoon trading session, the benchmark MOEX index fell below 2,368 points for the first time since March 2023. The index continued to slide, ultimately dropping 4.42% to approximately 2,313 points by the end of the day.
Among the top losers was the digital real estate marketplace Tsian, which saw its shares decrease by more than 14%. Aeroflot, Russia’s flagship airline, also faced significant losses, with shares dropping over 6%. The decline in Aeroflot’s stock price is partly attributed to ongoing disruptions in flight operations, which have been exacerbated by Ukrainian drone attacks on airports.
The MOEX index has been in a slump since March, losing over 14% of its value since the beginning of the year. This latest losing streak has now surpassed the decline recorded during the global financial crisis of 2008.
According to Igor Dodonov, the deputy head of equity analysis at Finam Financial Group, domestic equities are under pressure following the Central Bank’s decision on Friday to cut its key interest rate by just 25 basis points. He noted that Central Bank Governor Elvira Nabiullina’s hawkish comments suggest a slower easing of monetary policy than investors had hoped for.
Dodonov highlighted additional challenges facing the financial market, including falling global oil prices, a strong ruble, increased risks of sanctions, and rising geopolitical tensions arising from the ongoing conflicts in Ukraine and the Middle East. He remarked that under these circumstances, traders are exercising caution and refraining from purchasing discounted stocks, despite significant technical oversold conditions in the market.
Furthermore, the ruble weakened against a basket of currencies, tracking the decline of Brent crude oil prices, which fell to $77.63 per barrel amid developments in the geopolitical landscape. This combination of factors continues to place strain on the Russian market, leaving investors wary of potential further declines.
