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Business / Finance

Shares at a crossroads. To buy or sell? themes of the day 15.07.2019 at 05:42

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During the previous week the Russian stock market has declined, but remains near historic highs. What to do in this situation to investors, because the stability can't last forever?

Market paused

the Domestic stock market took a corrective pause. Just a couple of days Mosberg index lost nearly 2%. The main factor for sales of steel news from Congress, where it approved restrictions on the purchase of the new Russian debt. The news is very painful for foreigners from April again began actively buying OFZs. According to the Central Bank, non-residents now own 30% of the market of ruble government bonds and their share in the Eurobonds of the Russian Federation — more than 54.5 per cent.

the Most cautious hastened to fix profit and to leave papers, and this explains the drop in prices of most blue chips. Sberbank shares per day fell by 1.8%. According to analyst PSB of Bogdan Zvarich, investors have the opportunity to take profits while the market is at its maximum values. "Since may, we have continuously grown, so has accumulated a canopy," he says. Index Mosberg over the last two months has increased by 10.5%. Alfa-Bank noted that market decline, the exit of investors from securities companies and banks, which have already passed the date of fixation of register for dividend payout.

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"In the short term the market may continue to decline, but the positive trend is not broken," — said Zvarych. In particular, the market can have a rising price of oil (the price of a barrel of Brent increased by 4%), and positive dynamics on Western exchanges. The S&P 500 index was updated last week's high, breaking through the 3,000 points. All of this affects investor sentiment, boosting the appetite for investments in risky assets, says the analyst.

This is confirmed by the data company EPFR Global, which tracks weekly investment flows into global funds to developing countries. During the week (3-10 July) net inflows in equity funds focused on Russia amounted to $ 100 million. As noted in my review the main strategist of the "BCS global markets," Vyacheslav Smolyaninov, a duct was greatest in the largest funds: JP Morgan, DWS and Pictet. "Russian stocks have received a significant credibility, reinforcing the positive dynamics of inflows", — he wrote.

market Participants also pay attention to the rather reserved reaction of the ruble. After the news about the sanctions on 12 July, the dollar has risen by only 22 kopecks, and the Euro rose by 29 cents. In early June, the currency was trading at higher levels.

In the short term, a significant weakening of the ruble, the experts do not expect. Support the domestic currency may have begun tax period. According to calculations of analysts of Bank "Saint Petersburg", the total volume of tax payments will amount to about 2 trillion rubles. On the other hand, any external news can print our currency out of balance. Especially if, according to the analyst, "freedom Finance" Alexander Osina, the sanctions against the national debt of Russia will provoke a response and it all escalated into full-blown trade war. "All this, of course, reflected badly on the market and our national currency," he said.

What to buy?

While the market remains uncertain, experts advise not to rush to sell shares, especially as the papers of many Russian companies are still in 1,5—2 times cheaper than foreign analogues. And historical analysis of the multipliers is not indicating excessive quotations. "If you compare the prices of Russian shares, earnings per share, it turns out that the Russian market as a whole is about 6 P/E, and the oil and gas sector is about 5. This corresponds to about the middle of the range of fluctuations over the past ten years," says the portfolio Manager of the criminal code "Alfa Capital" Dmitry Mikhailov.

besides the dividend ahead of the new season, which can become more fruitful for the investors. Plans to increase dividend payments are Gazprom, Rosneft and other major issuers. However, guarantees that owners of their shares will receive the expected result, no one will. For example, should you buy shares of "Gazprom" after just a few months of paper has risen by 50%? Not the fact that companies will be able to solve a problem with gas exports in the first half of 2019, shipments have decreased by 5.9%.

However, according to a financial analyst "BCS Premier" Sergei Dejneka, investments in state-owned companies remain one of the safest strategies in the Russian market. "On the one hand, their production is directed to export. That is, they are less dependent on the exchange rate, because you get foreign exchange earnings. On the other hand, they can always count on massive support from the state," he says.

The solid was advising investors to take advantage of the situation and increase the portfolios of securities of companies whose shares are falling after the dividend gap. Including Severstal, MTS and Tatneft. Those who are waiting for the deterioration of the situation in the market, financial broker at investment company Dmitry Balakin offers to hedge risks by purchasing futures on precious metals or shares of the largest gold producers. In this case, however, we must remember that the value of shares of the same "Pole" is now at the peak. From the beginning of June the rate has risen 23%.

Therefore, it is more secure to sit out volatile times in the short OFZ. In particular, an interesting option could be the release 24019 maturing in October this year. Now bonds traded with a yield above 7%. Approximately the same yield you can expect, buying 29011 OFZ maturing in January 2020.