Russian shares are expected to rise more than 8 percent by the end of the year, a Reuters poll showed on Friday, lifted by a gradual recovery in the price of oil. Analysts said possible stimulus measures by Chinese policymakers could provide a further boost, though they cited further interest rate rises in the United States and a new flare-up in tensions between Russia and the West among risks.
The dollar-denominated RTS share index has gained around 16 percent so far in 2016, helped by oil prices rising off multi-year lows and the rouble strengthening. Brent crude will average $40.90 a barrel this year and $54.70 next, a separate Reuters poll found.
Oil and gas companies have a weighting of around 50 percent in the RTS, making energy prices a key determinant of its fortunes. "As we stay bullish on the rouble in the long-term due to an upward oil futures curve and rock solid current account surplus, we see the RTS index getting support," Danske Bank trading strategist Vladimir Miklashevsky said.
Miklashevsky added that if the Russian central bank resumed a monetary easing cycle in the second half of the year, as suggested by a Reuters poll on Thursday, that could be positive for stocks. He was the joint most bullish in the poll, taken in the past week, with an end-2016 prediction of 1,050 points. The median forecast from 11 analysts was that the RTS would end the year at 950 points. It closed at 876.2 on Thursday.
Many analysts had not changed their forecasts from a December Reuters poll, when the median forecast was also for the RTS to end 2016 at 950. Russian assets fell out of favour in 2014 as the United States and European Union imposed economic sanctions on Russia over its role in the Ukraine conflict and oil prices collapsed.
In 2015 the RTS lost another 4 percent, as Russia launched an aerial bombing campaign in Syria, increasing confrontation with the West. For the latest poll, end-2016 forecasts ranged from 800 to 1,050 points, reflecting uncertainty as to what the next nine months will hold. Evgeny Monakhov at Deutsche Bank saw the RTS ending 2016 at 960 points. He said share prices could be helped by expectations Western sanctions would be withdrawn next year. Oleg Shagov at investment firm Solid said government plans to privatise stakes in diamond miner Alrosa and oil company Bashneft could continue to drive interest in those stocks.