Russian stock market awaits results of Putin's visit to China on Power of Siberia-2
The MOEX index on May 19 is trading slightly positive around 2670 points, with investors awaiting concrete news on the timing and parameters of the Power of Siberia-2 gas pipeline construction following the official visit of the Russian president to Beijing.
Here is a detailed analytical piece written from the perspective of an industry insider.
Power of Siberia-2: How Putin's fifth attempt turns the Russian market hostage to a gas pipeline
The essence: What is really happening
The MOEX index has stalled around 2660-2670 points, and the market is pretending to wait for news from Beijing. In reality, the professional community is not betting on a contract signing but on another round of "progress without a breakthrough." The history of Power of Siberia-2 spans twenty years—since 2006, the project has been postponed several times. Vladimir Putin's current visit to Beijing is the Kremlin's fifth attempt in the last four years to get the pipeline moving.
What retail investors perceive as "anticipation" is, at the institutional level, hedging against disappointment. Trading volumes on the MOEX are low, a classic sign: large players are not building positions on the news but rather reducing them, locking in speculative gains in Gazprom shares, which Alfa-Bank analysts directly call speculative rather than a fundamental turnaround.
The key intrigue is not whether an agreement will be signed—the market already understands that a specific contract with a gas price is unlikely to be announced. The intrigue is whether Moscow can at least secure a framework memorandum that would allow Gazprom to start design work. That is what the company's shareholders are waiting for, whose shares rose ahead of the board of directors meeting on May 19, where a dividend recommendation is being discussed for the first time since 2022.
Timeline and context
The history of this gas pipeline is a chronicle of missed opportunities with huge financial stakes.
2006: First round of negotiations. The project is considered an alternative route for gas supplies to China. The route length will be about 2,600 km, with a capacity of 50 billion cubic meters per year. Construction costs were then estimated at about $13.6 billion, although later estimates put it as high as $25 billion.
2019-2022: The project gets the official name Power of Siberia-2, and the Mongolian transit section Soyuz Vostok, 962.9 km long, is agreed upon. But each time negotiations stall on the gas price: Beijing demands a discount to European prices, Moscow insists on market conditions.
Late February 2026: Closure of the Strait of Hormuz after the start of the US-Israeli military operation against Iran. Brent oil surges 75% over the year, reaching $109-110 per barrel. This radically changes Russia's negotiating position: the energy crisis makes Moscow an indispensable supplier, and Beijing can no longer dictate terms.
March 2026: China includes the "central route of the China-Russia gas pipeline" in the draft five-year plan for 2026-2030 for the first time. This signals serious intent, but details are not disclosed.
Late April 2026: Gazprom CEO Alexei Miller and CNPC Chairman Dai Houliang meet in Beijing to discuss "strategic partnership."
May 9, 2026: Putin states that "almost all key issues" on gas and oil cooperation with China have been agreed upon. The market takes this as a hint of a breakthrough.
May 18-19, 2026: The MOEX index closes up 1.31% to 2668 points, but on May 19 it trades without clear direction. The dollar falls to 71.97 rubles, the euro to 84.02 rubles, and the yuan to 10.61 rubles.
May 20, 2026: Putin and Xi Jinping are scheduled for talks, followed by an informal tea session to continue discussions.
Who wins and who loses
Winners:
- Holders of Gazprom shares who entered before the rally. The company's shares rose on expectations of two events: a possible signing of the Power of Siberia-2 agreement and the board meeting on dividends. Those who bought before this rise are already in profit. However, analysts warn: given the current level of capital expenditure, Gazprom will likely have to postpone payments, making current holders' positions vulnerable.
- Mongolia. The transit country gains geopolitical weight and infrastructure investment. The Soyuz Vostok section is estimated at several billion dollars and will create jobs in the country's underdeveloped regions.
- Chinese gas consumers. Beijing gains leverage over prices: if Power of Siberia-2 is built, China diversifies supplies and reduces dependence on LNG, which is currently expensive due to the closure of the Strait of Hormuz.
Losers:
- Holders of long positions in Gazprom who entered at the peak. If a specific agreement is not signed and the board does not recommend dividends, the speculative growth will be followed by sharp profit-taking. The MOEX index could fall back to 2620-2630 points.
- European gas buyers. Redirecting Siberian fields to China means that even in the hypothetical event of restored relations with Europe, there will be no physical volumes for supply—they are already contracted by Beijing.
- Small investors who bought on rumors. The Russian market is known for the "buy on expectations, sell on facts" pattern. If news from Beijing is vague, retail holders without access to insider information will be the first to face a sell-off.
What the media are not telling
Insider one: This is the fifth attempt, and each previous one failed over price.
Bloomberg directly calls the current visit "Putin's fifth attempt to convince Xi." The previous four rounds (in 2023, 2024, and 2025) ended the same way: China agreed to "continue negotiations" but did not commit on price. Beijing uses classic tactics: it is strategically interested in the pipeline but does not intend to pay as much as Gazprom asks. A source close to the Russian state company said Gazprom made a very competitive offer, but the Chinese side "showed no desire to advance the project."
Insider two: Russia hopes to settle the price issue by September, but this may be an illusion.
The same source claims the goal is to agree on a gas price by September. This is an ambitious timeline given the twenty-year negotiation history. The market is likely not pricing in this deadline, preferring to wait for specifics.
Insider three: The Middle East conflict is a window of opportunity that may close.
The 75% rise in oil and the closure of the Strait of Hormuz have created a unique moment of strength for Russia. China, facing supply disruptions from Iran, is forced to seek alternatives. But this window is not permanent: if the Middle East conflict is resolved, Beijing's negotiating position will strengthen again, and Russia will lose leverage. That is why Putin is pushing negotiations now, including Deputy Prime Minister Alexander Novak and Central Bank Governor Elvira Nabiullina in the delegation.
Fourth point: Gazprom dividends and the pipeline are non-linearly related.
The market expects the Gazprom board of directors on May 19 to recommend dividends. But the paradox is that signing the Power of Siberia-2 contract would not increase but decrease the likelihood of payouts in the short term. Building a pipeline costing at least $13.6 billion will require massive capital expenditure, and Gazprom will prefer to direct free cash flow to finance the project rather than dividends. That is why Alfa-Bank analysts warn: a refusal to pay dividends or a lack of recommendation will trigger local profit-taking in the oil and gas sector.
Forecast: Next 30 days and 90 days
30-day horizon (until June 18, 2026).
The talks in Beijing will end with the signing of a framework memorandum of intent, but without specific figures on price and construction start dates. The market will see this as a "positive but insufficient" signal. The MOEX index could briefly rise to 2700-2720 points if the rhetoric is optimistic. However, after the news fades, a correction to 2620-2630 points will begin.
Gazprom shares will be volatile: a positive dividend recommendation on May 19 could support quotes, while a refusal or lack of recommendation will intensify profit-taking. The dollar will continue to trade in the range of 71-73 rubles, supported by an inflow of foreign currency revenue from expensive oil.
Key risk: if Beijing releases a completely empty statement without mentioning specific timelines, the market will see it as a fifth failure, and the MOEX index could fall below 2600 points.
90-day horizon (until August 17, 2026).
If the goal of agreeing on a price by September is achieved, it will trigger a revaluation of the entire oil and gas sector. Gazprom will secure a contract for 50 billion cubic meters per year—comparable to the capacity of the halted Nord Stream 2. The company's shares could rise 20-30%, and the MOEX index could break above 2800 points. If successful, shares of pipe companies (TMK, OMK), equipment manufacturers, and construction contractors will also rise.
However, a more likely intermediate scenario: by August, negotiations will continue without a final agreement. China will drag out the process, seeking additional price concessions. In this case, the market will tire of waiting, and by the end of summer, the speculative overhang in Gazprom shares will begin to dissipate, returning quotes to fundamentally justified levels. The MOEX index could correct to 2550-2600 points.
The ruble will remain strong in any scenario: the inflow of currency from oil at $109-110 per barrel ensures a sustainable trade surplus. By August, the dollar will trade in the range of 70-74 rubles, unless a sharp drop in oil prices occurs due to a resolution of the Middle East conflict.
The main takeaway: the Russian market is now hostage to one pipeline, and this dependence will only increase as the European market for Gazprom is permanently closed. Putin's fifth attempt may not be the last—but each subsequent one will be harder for Moscow and more advantageous for Beijing.
— Editorial Team
