The Russian market has decided to await the development of events in Syria

The Russian market has decided to await the development of events in Syria

Russian markets hardly reacted on the news of the use of Armed forces in Syria. On Wednesday morning, September 30th, the Federation Council unanimously approved the use of Armed forces of Russia abroad. Later, the defense Ministry spokesman said that Russian planes had already started “conducting air operations with the application of point strikes on ground targets terrorists of ISIL”. The MICEX index to 16:00 has grown on 1,18%, RTS — by 1.1%.

Today’s events the market treats as rather technical, is a kind of formalization, the translation in the public sphere already known from the flow of news of Russia’s position on the conflict in Syria, says chief economist “PF the Capital” Evgenie Nadorshin. “Russia’s participation in the conflict and its position already for anybody are not a surprise, so we don’t see the reaction of the markets. Today the players have not seen any signs of deterioration or progress,” he explains.

We await developments and don’t understand how to respond, says chief economist for Russia and CIS “Renaissance Capital” Oleg Kuzmin. “Russia’s participation in the Syrian conflict is a long and complex process, to do conclusions while early, but the aggravation of the situation in Syria, of course, would affect the markets and currencies of countries that have some relation to the conflict. And if the pressure on global currencies — dollar and Euro — will be fairly limited, the reaction of the Russian market and the ruble could be stronger, if there will be negative news,” says Kuzmin.

Syria for a while will be the source of news, positive or negative, which can move the Russian market and affect the exchange rate, but it is unlikely a reaction to the scenario would be as strong as a reaction to the geopolitical situation in Ukraine, it is less strong stimulus for the Russian market, adds Nadorshin.

The ruble had almost not reacted to the decision of the Federation Council. 16:00 the dollar against the ruble lost 0.25% and traded at the level of 65,47 rubles per dollar. The Euro fell by 0.59% to 73,31 rubles for Euro. “At the time when he announced the decision of the Council of Federation, there was a small jump, the news has weakened the ruble by 30 kopeks, but he later continued to strengthen thanks to stable oil prices”, — says the head of the dealing center of Metallinvestbank Sergey Romanchuk.

Romanchuk noted that in the development of the Syrian conflict there are two basic scenarios: Russia’s actions in Syria may strengthen the international position and improve the prospects for normalization of relations with the West, or, on the contrary, to put these perspectives into question. “The news, which followed the decision of the Federation Council, Russia demanded that the United States ceased flight operations over Syria in the coalition against ISIS, and the Americans have stated they do not intend these flights to stop, until they say that increases the probability of the second scenario,” — said Romanchuk. He believes that the risk of a confrontation of Russia with NATO as a result of such replicas may grow, which will put pressure on markets, and on the ruble.