Russia’s MoEx Index Exhibits 17 Trading Session’s Consecutive Growth

Amid lukewarm performances of most global stock indices balancing between moderate optimism and fears of imminent recession, several Asian benchmarks look like apparent winners; but the last weeks’ rally of the Russian stock index MoEx cannot leave anyone indifferent.

The reason for the continuing double digit rally has been the expectations of fat dividends, good semiannual earnings – so far confirmed by such names as Russneft, Transneft and ADR-bearing X5 Retail Group – and some oil price recovery. Oil prices are rising after the release of lukewarm macrostats on the U.S. Retail sales in the U.S. in June grew MoM weaker than expected, and industrial production unexpectedly declined. Such soft numbers supported expectations that the Fed may curb the rate hike cycle after the July rate hike.

The Russian stock market indices have been growing for 17 consecutive daily sessions almost unstoppable and without any significant correction. The situation was similar in the spring this year, when the key underpinning factor was the dividend expectations. Now the main driver of growth is, among other considerations, the weak ruble, which fuels demand for the exporters' securities. Besides, probably, funds that recently received dividends do prefer to actively reinvest their proceeds. In general, there are very little risks for the stock market’s precipitous correction, but the peak of the current growth cycle is approaching and may become more palpable near the 3000 points, from where the index may start to slowly self-adjust.