Experts: Possible interest rate hike by the Central Bank will not affect the markets

MOSCOW, May 4 – RIA Novosti. According to experts interviewed by RIA Novosti, a possible increase in the Russian Central Bank’s key rate will not have a significant impact on the stock market this year.

On Friday, Central Bank governor Elvira Nabiullina said the regulator considers it more likely to increase the rate this year rather than cut it. The Central Bank Governor noted that he is monitoring how the decisions of the Central Bank of Russia affect the level of inflation that the regulator wants to keep at 4% in 2024. At the last meeting, the Central Bank is expected to keep the policy rate at 7.5% for the fifth time in a row.

Traditionally, it is believed in the stock market that an increase in the rate causes an outflow of funds from the stock market and, accordingly, a decrease in quotes. The head of the information and analytical content department explains that bond yields tend to rise during rate hikes, making them more attractive than stocks, which must be offset by the corresponding increase in stocks’ potential returns. “BCS World of Investments Vasily Karpunin.

“In my view, a moderate increase in interest rate will have little impact on the stock market. The bond market is already taking into account more hawkish expectations and so I don’t expect a significant flow from stocks to bonds,” he said. Natalya Malykh, head of stock analysis at FG Finam.

Oleg Syrovatkin, a leading analyst at Otkritie Investments, a global research department, believes that a minor adjustment in monetary policy is unlikely to affect the alignment of forces in the Russian stock market. The analyst believes that drastic changes in monetary policy can only be the result of some kind of shock.

Natalya Milchakova, one of the leading analysts at Freedom Finance Global, states that the key rate changes affect the OFZ and corporate bonds market, but such changes do not affect the stock market in any way, according to the analyst.

“If the key rate… is raised, it will be possible to consider buying OFZs as their returns will increase. It would be best to buy OFZs with a fairly close maturity – six months to two years, then the highest return for a not too long period of time. It will also be possible to evaluate the purchase of bonds from highly reliable Russian issuers, this instrument will be riskier, but with a higher yield. Government bonds,” said Milchakova.

The analyst also sees a mutual fund that invests primarily in government bonds and corporate bonds of highly reliable companies as an attractive investment. Milchakova sees an alternative option to invest if the deposit rate in a reliable Russian bank increases, which will begin to increase profitability in case of an increase in the interest rate. At the same time, according to the analyst, it is better to keep money in Russian banks not in foreign currency, but in rubles.

Vasily Karpunin of BCS Mir Investments states that in case of an increase in ruble rates, the coupon yield of a series of bonds may increase, for example OFZ floating instruments whose coupon is fixed at the RUONIA market rate and grows when the key rate is raised.

As for stocks, banking sector stocks and especially Sberbank, which is confident amid prospects for higher dividend payments and improved financial performance despite harsh sanctions, could benefit from a significant rate hike due to a potential increase. interest income Analyst of Veles Capital Investment Company Elena Kozhukhova.

Finally, consumer stocks will look most attractive if there is a major change in monetary policy, said Syrovatkin of Otkritie Investments.

“In shock conditions, the defense sectors usually show the highest stability. We have several related investments in the consumer sector that fully meet this condition. These are ideas on the securities of the X5 Retail group, Magnit, Beluga and Rusagro. All from our point of view, they are about approx. They have 25% growth potential,” concludes the expert.