The Russian stock market showed a far from leading position among the markets of developing countries before the elections of the US President. There was a tendency for a significant reduction in investments in funds of the Russian Federation. There is a high level of negativity that may come from the democrats towards Russia.
However, this decision of the American people brought positive aspects as well. Due to the dominance of the Republican majority in the Senate, a decrease in the level of previously indicated sanctions is possible. Along with this, Russian companies regularly pay rather substantial dividends. Such a measure may serve as a reason for the return of some foreign investors.
Reasons for the decline in investments in the Russian stock market
As the last week before the election race in America showed, foreign investors did not please the participants of the Russian stock market with their behavior. According to experts, this week has brought disappointing indicators for the entire last month.
Inflows to global equity funds, of which the Russian market accounted for about $ 20 million, had a positive impact on the situation. However, the overall result shows negative indicators.
The supposed victory of the Democrats could promise some risks for non-residents. Perhaps they tried to reduce these risks to some extent by using outflows from Russian funds.
According to experts, preliminary polls of the electorate were conducted on the eve of the elections. Representatives of the Democratic Party were to take possession of the majority of the Senate seats. This circumstance should have greatly facilitated the adoption of the planned sanctions against Russia.
Another expert opinion should be consulted. A decrease in the interest of private investors in the Russian stock market is allowed due to the negative dynamics of Russian shares in recent years.
Of course, the sales volume cannot be called so significant, but in the current situation, such sales could have a significant impact on the pricing policy.
We must not forget about the new European lockdown. He was able to make a significant impact on the financial market. However, investors remained wary about the uncertainty about the outcome of the American elections.
Each of these factors influenced the decrease in the importance of the shares of the largest companies in the country by 7%. Some securities have depreciated even by 10%.
The increased interest in GEM funds is associated with the alleged victory of the Democrats. This would lead to greater fiscal incentives through investment activities in the infrastructure and energy sector. In addition, this event would be a reason to increase the tax base for American companies.
According to experts, if the baseline scenario is observed, fiscal incentives become a certain negative factor for the dollar. After all, this currency is inversely correlated with trends in emerging markets.
It is difficult to dispute the view that increasing US corporate taxes will reduce the attractiveness of US companies. Many of them plan to increase exposure in emerging market segments.
If you believe the expert opinion, then the coming of Biden to the presidency will serve as a reason to reduce the risks of new global trade wars. Similar conflicts are reflected in emerging markets.
However, there are notes of restrained optimism in the expert opinion when discussing non-residents on the Russian market. There is a positive attitude even if Joe Biden wins the presidential race, but, according to preliminary data, such positive trends will not spread to Russia.
According to expert Mark Donikyan, the onset of a positive scenario for Russian investors regarding the sanctions issue will become likely if the Republican majority in the US Senate wins.
In addition, there is an assumption that foreign investors will be interested in the Russian market when global economic growth begins. The stake will be placed on cyclical organizations that dominate the Russian market and are distinguished by high dividend payments.