Business · Economy · 10 hrs ago
Russian lawmaker says rate cuts could boost developers and indebted firms
Russian lawmaker Alexey Govyrin says further rate cuts could boost the stock market.
He expects property developers and companies with high debt to benefit most, because lower rates reduce their borrowing costs.
The Bank of Russia has held its key rate at 14% since July, and investors are already expecting it to stay unchanged at the next meeting.
The bank is due to make its next rate decision on October 23.
Govyrin says any signal of future easing could give shares a fresh lift, while a cut could also make stocks more attractive to household investors.
He says the market has risen more than 25% since mid-summer and is near 2,430 points.
He sees a move toward 2,500 points if the index holds above 2,430, with a more supportive rate decision potentially lifting that target to 2,550.
Russian lawmaker Alexey Govyrin said real estate developers and highly indebted companies could benefit most from further interest-rate cuts.
He said each percentage-point cut would reduce debt-servicing costs and directly increase profits.
Govyrin said Russia’s stock market had gained more than 25% since mid-summer and was hovering around 2,430 points.
He said the Bank of Russia’s October 23 meeting would be the next major market catalyst.
Govyrin said a rate cut could make equities more attractive to retail investors.
- Who
- Alexey Govyrin, Deputy Chairman of the State Duma Committee on Economic Policy.
- What
- He said further rate cuts could boost stock-market activity, especially benefiting real estate developers and highly indebted companies.
- When
- He made the remarks ahead of the Bank of Russia’s October 23 rate-setting meeting.
- Where
- Russia.
- Why
- Rate cuts can lower companies’ debt-servicing costs and make equities more attractive to retail investors.
This story does not have two clearly opposing sides.
The key rate had stood at 14%, according to Govyrin.
The Russian stock market had gained more than 25% and was hovering around 2,430 points.
Govyrin made his remarks ahead of the central bank’s upcoming rate-setting meeting.
The Bank of Russia was scheduled to hold its next rate-setting meeting.
- Rate
- 14% since July
- Market gain
- More than 25% since mid-summer
- Market level
- Around 2,430 points
- Next rate-setting meeting
- October 23
- Possible market target
- 2,500 points, or 2,550 after a dovish rate decision
What people are saying
Real estate developers and companies with high debt loads would benefit the most, as every percentage-point drop in the rate reduces debt-servicing expenses and directly boosts their bottom line.
Since mid-summer, the market has gained more than 25% and is currently hovering around 2,430 points
A rate cut will make equities more attractive to retail investors, funneling new capital into the stock market