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Valuation of the Russian stock market

Vol. 18, Iss. 11, NOVEMBER 2019

Received: 2 September 2016

Received in revised form: 24 October 2016

Accepted: 7 November 2016

Available online: 29 November 2019

Subject Heading: Securities market

JEL Classification: G12

Pages: 2606–2624

Khasanov R.Kh. Financial University under Government of Russian Federation, Omsk Branch, Omsk, Russian Federation

ORCID id: not available

Lavrinenko A.O. Financial University under Government of Russian Federation, Omsk Branch, Omsk, Russian Federation

ORCID id: not available

Subject The article analyzes the value of the Russian MICEX index, determines the extent to which the Russian stock market is underestimated, and assesses the Price-to-Earnings ratio.
Objectives The research measures the value of stocks included into the MICEX index. We pursue using two valuation methods and assessing Price-to-Earnings ratio.
Methods The research applies the cost and discounted cash flow methods to business valuation by measuring the value of stocks and the weighted average cost of the index.
Results As the main results of the research, we measured the value of the MICEX index, Price-to-Earnings ratio of the MICEX index using two methods, thus concluding on the undervalued nature of the Russian stock market.
Conclusions and Relevance We conclude that the Russian stocks are undervalued. It means that the Russian market has a big potential for growth, on the one hand, but there should be certain attempts of the State to cover the gap between the value of the Russian stocks and foreign ones, on the other hand.

Keywords: value, business, stock, MICEX index, Price-to-Earnings ratio


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