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Gas industry

Russia's Stock Market Rally: A Year After Yukos Affair

Strategic Insights

— 2 min read

The Russian stock market, which plummeted to a low last year after the re-nationalisation of Yukos, has seen a significant rally this year following the liberalisation of Gazprom's shares. President Vladimir Putin's administration has taken steps to increase foreign investor participation in the Russian state energy giant, allowing them to own up to 49% of Gazprom. This move has contributed to a remarkable 80% growth in the RTS stock market index, which closed yesterday at 1,115.92.

Key Takeaways:

  • The re-nationalisation of Yukos last year led to a significant decline in the Russian stock market, but this year's liberalisation of Gazprom's shares has sparked a remarkable 80% growth in the RTS stock market index.
  • The liberalisation of Gazprom's shares is a valuable gift to foreign investors, who can now own up to 49% of the Russian state energy giant, up from being limited to American Depositary Receipts.
  • The impending global listing of Rosneft, valued at up to $60bn, is expected to further boost the Russian stock market.
  • The market has been cautious, with investors still wary of the risks following the Yukos affair and the government's accumulation of control over strategic sectors of the economy.
  • The rising oil price has been the single biggest driver of the Russian market last year, with the average price of Russian oil rising from $35 to $51 a barrel, a 45% increase.
  • Foreign investors now account for only 30% of all activity in the Russian market, down from 70% a few years ago, as Russian investors take on a more prominent role due to the growing oil receipts.
  • The Russian government's accumulation of control over oil and gas sectors, such as Gazprom and Rosneft, may hinder growth and create dependence on oil royalties.

Statistics:

  • 80% - Growth in the RTS stock market index this year, closing at 1,115.92 yesterday.
  • 49% - Maximum foreign ownership allowed in Gazprom.
  • 45% - Rise in average price of Russian oil, from $35 to $51 a barrel.
  • $60bn - Valuation of Rosneft's impending global listing.
  • 30% - Share of foreign investors in the Russian market, down from 70% a few years ago.
  • 70% - Share of Russian investors in the Russian market, accounting for 70% of all activity.
  • $450m - Daily earnings for Russia at current oil prices.

Sources:

  • Eric Kraus, chief strategist at Sovlink Securities
  • Al Breach, chief strategist at Brunswick UBS
  • Andrei Illarionov, former adviser to President Vladimir Putin
  • Christopher Weafer, chief strategist for Alfa Bank
  • "Russia's Stock Market Rally: A Year After Yukos Affair" (The Financial Times)

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