Future-proofing: How the stock market will change in 2025
The coming year promises to be challenging for the stock market. The intertwining of geopolitical and economic factors will shape the investment landscape. Assessing potential risks and opportunities and choosing the right strategies will be key challenges for investors seeking success. Stocks and bonds will remain risky instruments for investment, experts warn. However, against the backdrop of monetary policy easing expected in the first half of 2025, yields on securities will rise. What will happen to the stock market - in the material of "Izvestia".
How the MosBirch index will change
According to the forecasts of the Central Bank of Russia for 2025, the peak of inflation in the country will be in April, after which the cycle of increasing the key rate of the Central Bank will end. This means that the demand for shares of Russian companies will increase, predicts Nikolay Vavilov, a specialist of the Strategic Research Department of TR Company. In his opinion, the MosBirch index may return to the significant level of 3,300 points.
In the base scenario, it may indeed recover to such a value, admits the head of stock analysis department of FG "Finam" Natalia Malykh. However, much will depend on the rates in the debt market - the greater the depth of easing, the more the market will grow, as money will begin to flow from deposits to shares, and vice versa.
The index's assessment already reflects the main risks: from geopolitics to rising inflation and the key rate. Besides, the index promises 8.3% dividend yield in 2025, the Izvestia interlocutor points out.
If we put aside the factor of tight monetary policy, we can see high expectations for the total profit of companies from the MosBirch index (10.3-11.0 trillion rubles). This, according to Malykh, creates conditions for paying good dividends in 2025.
Is it profitable to invest in shares
The bulk of companies will continue to pay dividends, and this yield together with the growing trend of the stock market after the end of the tightening of DCP may reach 30-40% at the end of the year, points out Nikolai Vavilov.
If we consider the scenario of economic recovery in more detail, then after April the inflation rate will slow down, and investors will begin to shift their capital from bank deposits to the stock market, turning it to growth, the expert predicts.
Changing the rhetoric of the Bank of Russia's monetary policy from tight to neutral will make the stock market the most profitable asset class, Huseyn Rzayev, personal broker at BKS World of Investments, is convinced.
- The whole point is that stocks lay down the change of the cycle in the economy in 3-6 months, in this case the potential beginning of the cycle of key rate reduction. I expect the first rate cut closer to the end of the first quarter of 2025," he predicts.
Under this scenario, the stock market has a 30% upside potential over a 12-month horizon. However, not all stocks will rise equally.
- Let's imagine that the market has four stages: rise, growth, decline and bottom. Right now, we are in a transitional stage between the bottom and the rise. At this stage, the most liquid stocks with large capitalization, low debt and growing business will feel best," says the Izvestia interlocutor.
In the second half of the year, as the rates decrease, the shares will go up. At this stage, holdings will be added, whose business units and "subsidiaries" will strive to enter IPOs, Rzayev believes.
In addition to economic factors, there are geopolitical ones. The resolution of the situation in the Ukrainian conflict zone may add another +20% to the stock market.
- Total for the year, the stock market will have a growth potential of 50%. In this case, it makes sense to pay attention to the shares of companies affected by sanctions, - the expert believes.
Speaking in general, it is worth buying shares of exporters with small debts as beneficiaries of the weak ruble, as well as "lumpy companies" as beneficiaries of high rates, advises Natalia Malykh.
- You can bet on a truce after Trump's arrival by investing in gas and transportation companies, as well as banks," she recommends.
What bonds to invest in
The year 2025 promises to be a time of reversal of the monetary policy cycle, says Alexei Kovalev, head of debt market analysis at Finam. There is no more positive period for bonds as an investment instrument than the time of falling interest rates, as the value of securities is inversely proportional to their yield.
- As a result, in 2025 investors, apparently, will be able to supplement their coupon income with the growth of the price of their bond as a result of lower interest rates in the economy, - the expert predicts.
Federal loan bonds have already increased in price quite a lot, Huseyn Rzayev reminds. Their yields correspond to the yields that occur at the key rate of 17%, so their growth potential is limited. The yields on OFZ bonds are expected to decrease by 2-3%, although the securities themselves will grow in value, Nikolay Vavilov believes.
- The growth of long OFZ quotations by the end of the year may amount to 35-45%. Ruble and foreign currency (replacement) bonds of Russian enterprises at the end of 2025 may also grow by 5-10%, - he admits.
In the bond market, in case of softening of the DCP, the demand for medium and long issues will immediately increase, which will support the prices of corporate bonds with fixed income, Vavilov suggests.
- As for currency bonds, price growth and moderate ruble devaluation will provide attractive yields on these stock market instruments against the background of shrinking supply," he believes.
Nevertheless, high inflation has forced the Bank of Russia to keep the key rate high for a long time. Therefore, Rzaev is sure that buying long OFZs in the near future is not the best idea.
- It is also unreasonably risky to buy bonds of companies with high debt load. It will be more and more problematic to pay high rates for so long, and old debts will have to be refinanced at current high rates. In the end, this may lead to a wave of defaults," the expert does not rule out.
The Izvestia interlocutor notes that in case of high inflation, sovereign bonds will be interesting, as they will protect against devaluation. These securities have a very good risk-return ratio: 9.5-10% to maturity depending on the term. This is the largest premium to the benchmark since 2014.
- I believe that this difference in yields will decrease over the next year, and the price of such bonds will grow," Rzayev says.
There are also corporate issues with "A" rating for up to two years and yields of about 30% to maturity, he adds. Such bonds can grow in price and give high coupon yield.
Where else to invest
In addition to stocks and bonds, in 2025 it is worth paying attention to several financial instruments, says Ruslan Pichugin, an independent expert in the field of private investment. The first of them is investment in commercial real estate.
- In 2025, it is important to focus not only on the housing market, but also on warehouses. The popularity of marketplaces contributes to the increase in demand for warehouses," the Izvestia interlocutor is convinced.
Another option to invest is to buy precious metals. This asset helps to diversify the portfolio and protect the capital from inflation and political risks, explains Pichugin. However, precious metals have limited liquidity.
Also, according to the expert, you can invest in exchange-traded mutual funds. They offer reliability comparable to bank deposits. Liquidity in this case will be high, but the yield will be moderate.
For those who are not afraid of taking risks, investments in cryptocurrencies are suitable. Some digital assets, according to Pichugin, have shown returns of 150-200% per annum in 2024.
- I expect that next year, the growing number of traders on crypto exchanges will lead to a decrease in the potential profit to 40-90% per annum, so it is important to take into account the high level of risk associated with investments in cryptocurrencies," the expert summarizes.
