Five Months of Decline: Moscow Stock Exchange Sees Only Sell-Offs

Moscow's stock market is in the throes of a five-month downturn, marked by a particularly harsh trading day last Thursday where the main index, iMOEX, dropped 4.24 percent. This decline continued into Monday, pushing the index below 1900 points for the first time, a stark contrast to its position above 2800 points a year ago.

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The past week was brutal. Thursday, with a daily loss of 4.24 percent, was the worst trading day in almost four years.

While dividend ex-dates for major companies like Sberbank and VTB contributed to recent losses, they are seen as exacerbating an existing downward trend that began in early summer. June saw an over 8 percent drop, with July's losses exceeding 15 percent so far.

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The dividend ex-dates of some stock market heavyweights have further pulled the index down.

Analysts point to a confluence of chronic and new risks. Mikhail Selzer, an analyst at BKS Investment Bank, identified five key issues. These include the stagnation of Ukraine war negotiations, which has removed a market driver previously influenced by U.S. policy shifts. Additionally, escalating political tensions and increasing sanctions from both the U.S. and Europe are weighing heavily on investor sentiment.

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It is not a single negative factor weighing on the market. It is the accumulation of a whole series of problems, some of which have become chronic, and new risks.

The market is also grappling with a fuel crisis, reportedly caused by Ukrainian drone attacks on Russian oil refineries, with estimates suggesting 40 percent of facilities are damaged. This has led to a ban on diesel exports, only partially alleviating fuel shortages and price hikes. This crisis, coupled with other factors, is fueling inflation, presenting a difficult challenge for the central bank's upcoming interest rate meeting. The bank's recent decision to raise rates by only 0.25 percentage points, instead of the expected 0.5, had already surprised markets.

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Estimates suggest that 40 percent of refineries are already damaged.