Russia market is still undervalued

We compared the market shares of the BRIC countries by the degree of recovery after the crisis, estimating what proportion of the incidence of pre-crisis to crisis highs minima played the stock indexes. To eliminate the effect of currency fluctuations on the results of the evaluation, we have transferred all the indexes in dollar terms. As a result, it turned out that the Brazilian Bovespa index recovered 66.73% of its fall from historic highs, Chinese index SSEC - 30.29%, Indian - 50.91%. If you take the average, it turns out that the countries BRIC without Russia, recovered, on average, at 49.3%. In turn, the RTS index played only a 38.27% loss. Assuming the average recovery of other BRIC markets fair, it turns out that the RTS should now be at 221 points higher. However, it is hardly worth taking into account such a weak recovery of the Chinese market: unlike other colleagues on the BRIC this year, he was already above current levels (this happened in early August), and the last one and a half months adjusted. Thus, the Chinese market has become a kind of engine and a pioneer recovery in stock prices, which is not surprising against the background of its leadership in the dynamics of real economy. And if you take the August highs, it turns out that China has played 46% drop.

However, and this comparison is not correct. The fact is that, unlike Russia and Brazil, strongly overheated markets of China and India reached a maximum in late 2007 - early 2008, but not in mid-2008. Thus, the point of beginning of the fall of the Chinese and Indian markets should take the maxima of the second quarter of last year. And by this fall, China has recovered by 89% (if we take the growth to the August highs), and India - at 69.88%. By this method, stock indices of the three countries BRIC played, on average, 75.2% of the crisis of falling. This corresponds to the restoration of the RTS index to the level of 2010 points. Thus, our calculations show that the RTS should now be in the range from 1490 to 2010 points. Average - 1750 points.

We expect the growth of the RTS index to the level of 1750 points by year's end, as well as strengthening of the ruble to the level of 27 rubles. per dollar.

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Analytics - results

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