MOSCOW, October 19. /TASS/. Continued monetary easing will give the Russian stock market a new boost, with real estate developers and highly indebted companies poised to benefit the most, as each percentage-point rate cut lowers debt-servicing costs and directly increases profits, Alexey Govyrin, Deputy Chairman of the State Duma Committee on Economic Policy, told TASS ahead of the central bank's upcoming rate-setting meeting.
"Since mid-summer, the market has gained more than 25% and is currently hovering around 2,430 points," the United Russia lawmaker noted. "In the stock market, a rebound of over 20% from its lows is traditionally considered the start of a bull phase, where buyers drive the momentum for months ahead. The summer dividend season is over, and part of the cash paid out to shareholders is returning to the market through new purchases."
The next major catalyst will be the Bank of Russia’s meeting on October 23, Govyrin said. "The key rate has stood at 14% since July, and investors have already priced in a continued pause. Therefore, any hint of further easing will provide a fresh impetus to the market. Real estate developers and companies with high debt loads would benefit the most, as every percentage-point drop in the rate reduces debt-servicing expenses and directly boosts their bottom line."
Domestic demand is also driving growth, the lawmaker added. "Tellingly, one of the country’s largest grocery retailers saw its third-quarter revenue grow by 13% year-on-year, up from 9.9% in the previous quarter. Consolidating the index above 2,430 points will pave the way toward 2,500; a dovish decision on rates could push the target to 2,550."
Another growth driver lies in household savings, according to Govyrin. "A rate cut will make equities more attractive to retail investors, funneling new capital into the stock market," he predicted.