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Yuri Selyandin: Russian Stock Market Review
Today Russian President Vladimir Putin appealed to the Russian Federal Assembly and signed an agreement to accept the Republic of Crimea and the city of Sevastopol as a constituent entity of the Russian Federation. In his emotional and well-argued speech Putin referred to numerous references to the international legal acts. He assured the audience that Russia had no claims to other territories of Ukraine, but was always ready to provide the Ukrainian people with all the possible assistance. Perhaps, these words inspired investors the most. Russia is committed to a peaceful resolution of the conflict.Therefore, we hope Western countries will not impose new sanctions, confining themselves to the measures announced yesterday against a limited number of officials and deputies.
Despite the Western sanctions announced on Monday, the Russian market went up. The price of the most sold securities continued to grow today. At present Gazprom, for which Ukraine is an important transit partner, was least able to recover.
At the moment investors are buying stocks because of their strong depreciation in the past two weeks. But after a while future dividends will talk in favour of purchases. This year the record date will be determined under new regulations. In the past years most of the books were closed in late April - early May, but this deadline will be postponed till June – July according to the changes in legislation. For example, Gazprom, which traditionally holds a shareholders’ meeting on the last Friday of June, used to record the registry between May holidays. This year the annual shareholders’ meeting will take place on June, 27th, thus the record date may take place anytime between mid-June and mid-July. So far it is difficult to assess how it will affect the market behavior, because the current situation is heavily influenced by both economic and political factors. In any case those investors who are interested in dividends find current prices very attractive. Such securities as Surgutneftegaz-pref, Bashneft-pref and telecom sector stocks like Megafon and MTS may seem worth investing in.
Last year the average dividend yield of the Russian market was 4.41%, which is one of the highest rates in the world. From this perspective, Russian market looks very attractive, although it is subject to certain risks.
Yuri Selyandin, senior portfolio manager
