The Russian stock market has long been likened to a compressed spring—a force held in place by opposing weights. For years, high-interest rates and geopolitical uncertainties have weighed heavily on the MOEX Index, leaving it subdued and underperforming relative to its global peers. But as analysts at Aton Investment Company argue, 2025 may be the year this spring uncoils, releasing pent-up energy and driving the index into a significant rally.
A Vision of Growth
Aton’s forecast is ambitious: by the end of 2025, the MOEX Index could climb to 3300–3500 points, marking a gain of 27.6–35.3% from its current level of 2586.74 (as of December 2024). This projection hinges on a series of interconnected factors, some within the control of market participants and others dictated by the unpredictable ebbs and flows of global geopolitics.
In their strategy document titled “On the Threshold of Big Changes,” Aton’s analysts emphasize the extraordinary potential of the Russian equity market. At the heart of their optimism lies the belief that the market’s current state represents not stagnation but preparation—a dormant force waiting for a trigger to release its potential.
The Weights Holding It Down
Two primary factors suppress the MOEX Index:
- High Key Interest Rates:
The Central Bank of Russia’s tight monetary policy has kept the key interest rate at 21%—a historic high. This stifles business expansion, discourages borrowing, and keeps valuations depressed. Yet, Aton predicts a gradual easing, with the rate dropping to 17–18% by late 2025 under a baseline scenario. - Geopolitical Tensions:
Persistent uncertainties surrounding Russia’s global relationships, particularly with Ukraine and Western powers, loom large over investor sentiment. While difficult to predict, any reduction in these tensions could provide the market with a much-needed release valve.
Why 2025 Could Be Different
The Russian stock market has consistently traded at a steep discount compared to global peers. For example, Aton estimates the median P/E ratio of Russian stocks to be around 4.8x for 2025—one of the lowest in the past decade and significantly below the 8–20x range typical for developed and emerging markets.
This undervaluation isn’t just a statistic; it represents an opportunity. Aton predicts that as interest rates decline, investor expectations will shift, leading to a revaluation of Russian equities. The P/E ratio could recover to 6.0–7.0x, pushing the MOEX Index higher.
Key Sectors to Watch
- Oil & Gas:
Historically a cornerstone of the Russian market, this sector continues to dominate dividend payouts. Analysts estimate that over ₽2.5 trillion of the total ₽4.5 trillion in expected dividends for 2025 will come from oil and gas companies such as LUKOIL, Rosneft, and Gazprom Neft.
High dividend yields, currently exceeding historical averages, are a major draw for investors. For example, companies in this sector often offer dividend yields exceeding 10–12%, reinforcing their appeal despite market volatility. - Financial Services and Technology:
As interest rates decline, sectors tied to consumer spending and corporate investment could experience rapid growth. Banks and technology companies are poised to benefit from the dual forces of reduced borrowing costs and rising investor confidence.
The Geopolitical Wildcard
Aton’s report candidly acknowledges that predicting geopolitical shifts is fraught with uncertainty. While a de-escalation of the Russia-Ukraine conflict could act as the spring’s release mechanism, the timing and likelihood of such a resolution remain unclear. Without this critical change, the market may face continued stagnation, with gains harder to achieve.
Currency Considerations
The Russian ruble adds another layer of complexity. Analysts project a $60 billion current account surplus for 2025, which should theoretically stabilize currency markets. However, inflation in Russia significantly outpaces that in the United States, suggesting a gradual depreciation of the ruble as a base-case scenario. This dynamic could create additional headwinds for foreign investors, who must weigh currency risk against the market’s growth potential.
The Dividend Boom
One of the MOEX Index’s most compelling features is its dividends. Aton projects that over ₽4.5 trillion in dividends will be paid by Russian companies in 2025. These payouts represent a staggering ten days’ worth of trading volume on the MOEX, underscoring their importance to investors.
While the oil and gas sector leads in absolute payouts, other industries are stepping up. However, some companies, such as NLMK and Norilsk Nickel, have signaled potential delays in dividend distributions, reflecting varying levels of financial resilience.
A Market at the Crossroads
The story of the MOEX Index in 2025 will likely be one of contrasts—a battle between the forces of progress and the weight of structural and geopolitical challenges. If the market can overcome these barriers, it stands poised to deliver returns that significantly outpace those of global benchmarks.
Aton’s forecast is a call to investors: the compressed spring of the Russian stock market is ready to expand. Whether the trigger comes from falling interest rates, geopolitical resolution, or both, 2025 could mark the beginning of a new era for the MOEX Index—a year where the potential energy of the past finally translates into kinetic gains.
