SAMT Blog
A short analysis of the MSCI Russia Index
22. December 2019, by Mario V. Guffanti
Technical Analysis
It is quite common to link the world of Russian stocks to the world of energy. In fact, most of the Russian stock exchange is based on energy-related stocks, hence the strong correlation between the stock indices that represent it and the Oil price: almost 60% of the MSCI Russia index has its constituents linked to the Energy sector. The chart below compares the index in USD (first box), with the Brent price (second box). We can note that the trend of the two curves is very similar and the 40 weeks correlation (third box), is mostly green, thus confirming that the two assets share a common trend for the most part of the time. After the great fall in 2008, both the Brent price and the Russian stock index, created a new historical low in 2016 (L1 and L2), and since that year a recovery began (the recovery is highlighted in the graph with regression lines confined by a tunnel drawn on the basis of two standard deviations). It is worth noting that the correlation of the last two years is beginning to be irregular (see the area circled in red in the third box) and the Brent price, after the peak in October 2018 (a), has had a series of lower highs, while the Russian index has behaved in the opposite way.
Finally, it should be noted that since 2016 the relative strength of the MSCI Russia index compared to the MSCI World index (last box) has been increasing, and the index is close to an important resistan...
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