Konstantin Vladimirovich Tserazov: “Expectations of dividends and high oil prices will become the main drivers”

By the equator of 2021, the Russian market has approached with positive results. What caused the growth and what factors can hinder the growth of the indices — in our interview, told an independent expert, economist Konstantin Tserazov (Konstantin Tserazov).

The beginning of the year was characterized by growth, and, despite the corrections, the indices were steadily moving upwards — in the first half of the year, the Moscow Exchange index grew by 14.7%, and the RTS index added 17.1%. A positive for the market was the reduction of geopolitical tensions, and the main driver was the growth of commodity prices, the expert believes. The high rate of vaccination of the population in the US and Europe also played a role, giving hope for a recovery in demand for oil, says Konstantin Tserazov.

According to Otkritie Bank analysts, oil showed the best growth among commodities — against the backdrop of production cuts by OPEC+ countries, the price of a barrel of Brent brand jumped by 45% to $75. Positive markets were added by statistics from China, which showed an increase in industrial production and retail sales, as well as a sharp increase in oil demand at the beginning of the year.

The key risks, according to Konstantin Tserazov, will remain geopolitics until the end of the year, as well as the possibility of a worsening epidemiological situation. Another important factor that can slow down the growth of the Russian market will be the possible tightening of monetary policy by the leading countries.

Expectations of dividends and high oil prices will be the main drivers of market growth until the end of the year, and investors will focus on blue chips with a good dividend history until the end of the year, Konstantin Tserazov is sure. The beneficiary of the economic recovery will be the banking sector, primarily Sberbank, which can show record profits and, accordingly, pay high dividends. In the oil and gas industry, Gazprom looks like a clear favorite, whose shares are growing on expectations of the commissioning of Nord Stream 2 and strong reporting. The potential dividend yield of this issuer’s shares, according to analysts at Otkritie Bank, may exceed 10%. According to Konstantin Tserazov, LUKOIL may become one of the leaders in dividend yield at the end of 2021, it is also worth including the preferred shares of Surgutneftegaz in the portfolio, the economist advises.