The Russian Trading System (RTS) is one of the two largest exchange platforms designed to trade Russian securities. It was organized in 1995 as an alternative to the MICEX that already existed at that time. After almost 20 years, RTS has transformed into a large-scale structure that not only provides access to exchange trading to private investors and professional participants in the securities market, but also provides a number of additional services, including clearing, settlement and depository.
The concept of the RTS index
What is the RTS Index? This is an indicator of the state of the Russian securities market, which is calculated on the basis of transactions with securities concluded on the RTS trading floor. Its value reflects the total market capitalization of shares traded on the Russian stock market. In turn, the capitalization of each individual company represents the market value of one share multiplied by the total number of shares outstanding and reflects the real market value of the company.
The RTS index, along with the MICEX index, is the main indicator of the state of the domestic stock market. However, after the combination of the MICEX and RTS trading floors, the calculation of both indicators is actually done by the same combined MICEX-RTS stock exchange . The main difference between these two indicators is that the MICEX index is calculated in rubles, and the RTS - in dollars. Therefore, its change is influenced not only by the dynamics of stock prices of Russian companies, but also by the change in the ruble exchange rate against the dollar. With the constant growth of the US dollar, the RTS index shows a more positive dynamics compared to the MICEX index. That is, its value grows faster, and decreases more slowly compared to its "competitor".
Types of RTS Indices
RTS stock indices include a whole family of different calculated indicators. These include: the RTS Standart index, the RTS-2 index, the volatility index (RTSVX), the RTS Siberia index (RTSSIB) and a number of industry indices.
The basic RTSI index (RTSI) is calculated on the basis of information on trading in shares of the 50 largest Russian companies. These include Gazprom, Lukoil, Sberbank, Surgutneftegas and a number of shares of other companies. To include the company's shares in the RTS index, they must meet two criteria. Firstly, the shares must be admitted to trading on the RTS stock exchange. Secondly, the company's capitalization should be at least 0.5% of the total capitalization of all shares included in the index. The list of companies is reviewed quarterly.
Calculation algorithm
The RTSI is calculated starting September 1, 1995. It was then that securities trading began on the RTS trading floor. Its value is reflected in relative units. As of the date of the first trading day, the RTSI was conditionally assumed equal to 100 points.
In order to understand what the RTS index is, we give a conditional example of calculating its value. Suppose that as of September 1, 1995, the total capitalization of companies whose shares were included in the RTSI index was $ 500,000. On the conditional date of the next calculation, it has grown, say, to $ 850,000. The conditional index value in this case will be:
850 000/500 000 * 100 points * 1.0752559 = 183 points (1.0752559 is the correction factor used in the calculations).
In other words, stock market capitalization increased 1.83 times.
Calculation Procedure
The RTS index is calculated on the basis of data on the purchase and sale prices of shares included in the index. This is done every 15 seconds, that is, in real time. But for bidders and stock market analysts, the most important information is provided by the data on the value of the indices at the time of opening and closing of trades, as well as the maximum and minimum values following the results of the trading session. It is these data that they use to analyze the dynamics and trends in the prices of shares of Russian issuers.
Now it became clear what the RTS index is and what is the algorithm for calculating it. It's time to evaluate the change in its value during the trading on the RTS Stock Exchange. Index values are constantly changing. This complex process is influenced by a whole range of various factors, which include the state of the world economy as a whole, the macroeconomic situation in the country, the state of a particular industry, and, of course, the situation in each individual company. Russia today in the world classification refers to emerging markets. Therefore, the values of domestic stock indices are very sensitive to fluctuations in the indices of developed markets, including NASDAQ and DowJones.
RTS Index Change History
1260 points - today the RTS index has exactly this value. The dynamics indicate that over the past 19 years, the capitalization of the Russian stock market has grown more than 12 times. At first glance, everything looks very optimistic. But is it really so?
The index reached its maximum value in May 2008. At that time it amounted to 2498.10 points. However, the 2008 crisis led to a serious decrease in the capitalization of Russian companies. As a result of this fall, the index value fell to a level of 80 points. Despite the recovery of the Russian economy, the domestic stock market still cannot fully recover from its serious losses. As a result, today the leading companies in the Russian economy are almost two times cheaper than in mid-2008. And this is taking into account the growth of the dollar against the ruble by more than 10 rubles. (from the level of 23-25 rubles to 35 rubles today for one dollar).
What is the RTS Index? This is a kind of litmus test of the state of the Russian stock market, and, consequently, of the economy as a whole. It is on the basis of its dynamics that we can conclude how successfully the largest domestic companies are developing. Analysis of the index changes allows us to conclude on the current state of the securities market and is one of the main criteria for making decisions on the purchase or sale of shares of Russian issuers.