What impact will developments in Russian stock market have on Azerbaijan?

The current foreign policy pursued by Russia and the adequate response of the world countries to this policy directly affect the economy. This influence is also manifested in the Russian stock market.

Valeh Ganbarov, head of the foreign markets department of one of the investment companies operating in Azerbaijan, told Report that there are currently three main reasons why the Russian stock market has collapsed by almost 30% in a short period of time:

"The first reason is the sanctions expected after Russia recognizes the Luhansk and Donetsk regions as independent republics. These sanctions will have a direct impact on Russian multinational companies. This will also lead to the outflow of international investors from these companies. This process is already underway.

“The second reason is the exit of domestic investors from assets in rubles and the transition to hard currency. This provokes an active sale of Russian shares.

“The third reason is that the Russian interest rate is lower than the dividend yield of Russian companies. This forces Russian retailers to carry out margin trading through brokers. So it leads to a downturn in the market.”

The director of one of the investment companies, Intigam Safaraliyev, believes that the impact of what is happening in Russia on the Azerbaijani stock market may be very insignificant: “Because this market has not received much development in Azerbaijan. Therefore, I do not expect major changes. The impact can be estimated at about 3-5%. In my opinion, local investors should not wait too long to buy shares in these companies. They will receive their dividends in May-June.”

The situation around Ukraine caused a decline in the Russian stock market. But today this decline has somewhat slowed down: The Moscow Exchange index is losing about 3.5% instead of the expected 9%.