Russian stock market falls for eighth consecutive week amid strong ruble
The Moscow Exchange index lost more than 5% in April, ignoring high oil prices and strong corporate earnings. Analysts attribute the decline to a lack of progress in peace negotiations and discussions about a possible tightening of the tax burden, forecasting the ruble at around 75 per dollar.
Russian stock market falls for eighth consecutive week: the paradox of a strong ruble and tax pressure
Introduction
April 2026 was a month of disappointment for the Russian stock market. Despite record oil prices (Brent crude soared to $126 per barrel, hitting a four-year high) and strong financial reports from giants such as Sber, Yandex, and Ozon, the Moscow Exchange index lost more than 5% over the month, extending its losing streak to eight consecutive weeks. At the same time, the ruble entered May confidently strengthening below 75 per dollar — for the first time in 2.5 years. This divergence between commodity prices and stock performance has created a paradoxical situation that analysts describe as a "depressing picture." What is the reason for this phenomenon, and should we expect a trend reversal?
Event details and timeline
Since the beginning of April, the Moscow Exchange index has shown a steady downward trend, occasionally hitting yearly lows. On April 13, the market attempted to rise, reacting to news of the collapse of US-Iran negotiations, which promised further oil price increases. However, global traders "got tired of the talk," and oil prices did not take off. As a result, trading was "directionless, on low volumes," and the benchmark got stuck in the range of 2710–2760 points.
By April 27, the situation had not improved. Investment strategist Alexander Bakhtin from Garda Capital described the situation as a "depressing picture." The IMOEX value hovered near the lower boundary of the 2700–2800 point range. The Central Bank of the Russian Federation's statement on the need to maintain tight monetary policy (raising the average key rate forecast for 2026) further "upset the market," causing the government bond market to fall by 1.5%.
Just a few days later, by the beginning of May, the decline accelerated. According to BFM.ru, the decline occurred "without obvious reasons and amid rising oil prices." Economists spoke of a technical correction, but its depth was unexpected: in the week after the Central Bank's decision, the index lost almost 5%. Experts at Investing.com stated: "The market is falling for no reason," citing "hopelessness" as the root cause.
Impact and significance (for the world, industry, society)
The paradox of a strong ruble
The main paradox of the current moment is the combination of a cheap dollar (below 75 rubles) and a falling stock market. Experts at Aricapital Asset Management explain this by the fact that the ruble remains strong due to the closure of the Strait of Hormuz, declining global oil reserves, and an inflow of export revenues. However, for the stock market, a strong ruble is a death sentence for exporters. When the national currency strengthens, the ruble-denominated revenues of exporters (oil companies, metal producers) shrink, directly hitting dividends and the investment attractiveness of the sector.
Tax pressure as a factor of capital outflow
A much more alarming factor exacerbating the decline is the 2026 tax reform. Since January 1, unprecedented fiscal changes have been in effect in Russia:
- VAT increased to 22% (while maintaining a reduced rate of 10%).
- Simplified tax system (STS) thresholds have been gradually reduced to 20 million rubles in revenue, depriving small businesses of the right not to pay VAT.
- Insurance premiums for SMEs increased from 15% to 30% on salaries exceeding 1.5 times the minimum wage.
As experts from Delovoy Profil comment, this is not just an adjustment of rates, but a "restructuring of business conditions," leading to a compression of profitability from the usual 15-20% to 5-8%. Businesses are losing their reason for existence, the investment climate is deteriorating, and large players are withdrawing capital from risky stocks.
Geopolitical deadlock
The third pillar of the decline is the lack of progress in peace negotiations. EU High Representative Kaja Kallas directly stated that negotiations between Russia and Ukraine have reached a deadlock, "nothing is happening." European experts also note the absence of a clear plan among Western allies, which "has yielded no results." The market, which had hoped for a reduction in geopolitical risks and a possible lifting of sanctions, was disappointed. As rightly noted by Investing.com, it is "difficult to talk about prospects" for investors when the geopolitical process is frozen.
Reaction of key players
The actions of major players confirm the pessimism.
Institutional investors and "whales" are withdrawing funds. Independent economist Vyacheslav Shiryaev claims that "professional players" see the approach of "shoals" and are dumping "junk assets." Retail investors who have withdrawn rubles from deposits are often advised to buy the "bottom," but analysts warn: the market is in "apathy," and "there is not much desire to buy."
The corporate sector is also showing nervousness. Shares of Moscow Credit Bank surged 60% on news of a possible share buyback at an inflated price (10.35 rubles per share versus a market price of around 5 rubles), which analysts called an "anomaly." This reflects companies' attempts to protect their capitalization through artificial means.
The Central Bank is forced to balance. On one hand, cutting the key rate could stimulate the market; on the other, inflation risks and a strong ruble force the regulator to maintain a tight rhetoric. The Central Bank raised its rate forecast for 2026, which "upset" bond and stock holders.
The Ministry of Finance is trying to weaken the ruble by returning to the fiscal rule and buying foreign currency to replenish the National Welfare Fund and support the budget, but so far this has had no effect.
Forecast and conclusions
What awaits the Russian market in the near future?
Short-term forecast
Analysts agree that the Moscow Exchange index will likely remain in the range of 2700–2800 points or continue a slight decline. Technical support is at the level of 2700–2720 points, and a break below could open the way to new lows. At the same time, any positive signal on geopolitics (even rumors of a ceasefire) could trigger a "bounce," but the reaction, as experts note, "is no longer what it used to be." There is little hope for a rally in the coming weeks.
Long-term risks
In the long term, the situation looks even more alarming. The tax reform has already led to profitability for many enterprises falling to 5-8%, a level at which investment in development becomes impossible. If we add to this the high cost of borrowed capital (the key rate remains high), companies have "no room or desire to develop new promising projects."
What does this mean for the investor?
For the retail investor, the current moment presents the classic dilemma of "catching a falling knife." Buying cheap assets now is dangerous because the external backdrop (tax pressure + geopolitical deadlock) remains extremely negative. However, as strategists rightly emphasize, "the market only needs one piece of news to start growing immediately."
The strategy for a prudent investor today is to focus on strong fundamental stories capable of generating dividend income even in a stagnant economy. Others should either lock in losses or wait out the "depressing picture" in conservative instruments (bonds or deposits) until tax and monetary policy give investors clear signals to return. Without real progress in peace negotiations and without a halt to the growth of the tax burden, it is premature to expect a trend reversal.
— Editorial Team
