MOSCOW: Russia’s stock market will hit all-time highs this year, boosted by strong commodity prices, record low interest rates and a business activity surge as countries roll out COVID-19 vaccines, a Reuters poll of 17 market experts forecast.

Russian stocks collapsed in the first quarter of last year under pressure from a drop in the price of oil, Russia’s major export, and the coronavirus pandemic, but recouped those losses by end-2020.

The MOEX rouble-denominated index, which hit a record high of 3,520.66 on Jan. 12, is expected to reach 3,600 by the middle of this year, up about 4.8% from 3,433.93 on Feb. 22, according to the Reuters poll.

Russia’s high dividend yields, which overtook bond yields in August 2019, proved an attractive proposition for retail investors last year as they turned to trading in droves, a trend spurred on by coronavirus lockdowns keeping people at home.

“By end-2022, Russian companies may exceed their profit levels from 2019. A similar situation is developing with regard to dividend payments,” said analysts from Gazprombank.

The strong upward move in commodity prices, one of the main drivers for Russian stock indexes, is likely to ensure sound corporate earnings growth and the recovery of dividends, they added.

By the end of 2021, the MOEX is seen reaching a record high of 3,775, climbing further to 3,950 by mid-2022. Forecasts for the MOEX year-end reading ranged from 2,600 to 4,100.

The prospect of more Western sanctions over the imprisonment of Kremlin critic Alexei Navalny has hampered further market gains so far this year.

“The main risk for the Russian equity market remains the threat of tough external sanctions,” said Vitaly Manzhos at Algo Capital. Should new measures target individuals only, as European Union sanctions did earlier this week, then Russian equities and bonds could escape largely unscathed, he said.

The dollar-based RTS index was forecast to trade at 1,590 points by the middle of this year, up about 9.3% from 1,455.33 on Feb. 22. The RTS was seen climbing further to 1,665 by end-2021 and to 1,700 by the middle of the next year. The RTS hit a record high of 2,498.10 on May 19, 2008.