Mix up on the Russian markets
European shares are recovering in late-morning trade on Monday following a slide on fears that Euro zone credit downgrades could worsen the region's debt crisis. Meanwhile the echo of the global reaction is hitting Russian markets with indices down further and blue chip prices slipping. However analysts believe the outcome of the day will be moderate even if indices remain in red. Eduard Bagiryan analyst from Maxwell Capital says investors will be prudent and less agile.“The negative effect continues to spread over the markets, above all US markets are on a day-off and investors will hold off on active steps hence the volume of trade on the Russian market will be insignificant. I expect MICEX and RTS to loose about 0.5% on the closing.”Last year the Russian stock market lost 20% in defiance of its long-standing correlation with the price of oil which gained 25% which is why Chris Weafer from Troika Dialog believes Russia’s equity markets this year will closely monitor the European debt crisis rather than following crude.
Nevertheless, Aleksandr Potavin analyst from IT Invest says high oil prices will support Russian indices. “The MICEX could probably get back to 1450 points however with strong oil prices set to fly over $110 per barrel the situation on the Russian market is more promising”, he says.