Feb 21, 2021
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Not a trickle, but a powerful river: Another $ 10 billion flowed abroad

Not a trickle, but a powerful river: Another $ 10 billion flowed abroad

Photo: DPA / TASS

In 2020, Russians invested 638 billion rubles in foreign securities. This is twice the amount by which the funds of citizens in foreign currency bank accounts decreased.

Simpler dialects: people withdrew their dollars and euros, and then with this money they bought stocks and bonds. As for bonds, Russians most often bought securities of large financial groups and countries that bring high dollar yields. In the promotions, the most preferable for the Russians were three industries – information, high technology and transport.

Svobodnaya Pressa talked with its permanent experts about why foreign securities have become so popular, and how serious their competition with Russian ones is.

– The high activity of the population in investing in the stock market is primarily due to the fact that as a result of the crisis caused by the coronavirus, most countries have taken unprecedented measures to support their domestic economies. And this, in turn, contributed to the formation of a kind of bubble in the financial markets, – believes Head of the Representative Office of the State Interests Fund of Armenia in Russia, investment product specialist Sergey Grigoryan?

– Thanks to injections, stocks and bonds began to recover at a rapid pace. Against the backdrop of falling rates on deposits, the population began to look for alternative sources of preserving and increasing capital. Therefore, according to the results of last year, a record number of new investors were recorded on the stock exchanges, who invested in both Russian and foreign companies.

“SP”: – But in Russian all the same more often.

– Indeed, I would not say that the share of investment funds in shares and bonds of foreign companies is large. In practice, it is only about 15%. This is not a very high figure.

Most investors prefer Russian securities. The scheme of investing in foreign securities is no more complicated than in Russian ones, but in practice, more funds are required for this, since, for example, one Russian share of a large company can cost within a few hundred rubles, and one American share of a large corporation is already more than 1,000 dollars.

“SP”: – How would you paint a portrait of an average investor who is ready to play on the stock market.

– Most of the investors who came to the market because of the crisis do not have significant capital, they came to look, try, test the waters, therefore, naturally, at the initial stages they will give preference to cheaper securities. More experienced investors are already moving on to more significant injections, it is at this stage that they begin to consider foreign companies.

The trend towards investing in financial markets is definitely positive as it provides additional support to the economy.

But it is too early to talk about mass investment in Russia – the level of financial literacy of the population is still too low. For example, in the United States, investing in stocks and bonds is the norm for almost every average household. They start investing when they come of age and do it until they die – it’s just as normal as paying bills, going to the store, running a household. In Russia, this has not yet come into use.

SP: – And what advice would you give to those people who are ready to invest in securities, it does not matter, Russian or foreign?

– Many citizens continue to be wary of the stock markets. In fact, only speculative operations are dangerous in this case for non-professional traders. You can lose significant amounts on them. For non-professionals, it makes sense to invest in the stock market only in the long term – 3-5-10 years.

The most profitable thing now, and indeed always, is to invest in shares of large companies. There is such a concept “blue chips” – it includes the largest national corporations, enterprises etc. A novice investor should choose them, and companies with state participation should also be considered.

You should not try to conduct speculative transactions, in some cases they may be successful, but this is rather an exception to the rule, since the losses in case of failure can be much greater than the profit as a result of a successful operation.

In the same time head of investment department of a consulting company Invention Anastasia Tarasova believes that the outflow of “foreign currency” clients is bad for the domestic economy.

“SP”: – Why do you think there was an increase in investments in foreign securities?

– Western markets have a number of advantages in comparison with the Russian one: greater liquidity and variety, clear schedules of reporting and dividend payments. In the context of popularizing the topic of investments, more and more brokerage accounts are being opened, investors are looking for profitable investments. In the light of recent events, Russian securities do not seem like that – largely due to distrust in economics and politics.

For example, in 2020, a law was introduced on the taxation of interest on deposits over 1 million rubles. Not everyone understood the innovations and began to withdraw money from banks. At the same time, one should not forget about a significant weakening of the ruble and a decrease in the key rate.

“SP”: – Money that could circulate on the Russian stock exchanges goes abroad. And how does this affect the domestic market?

– With the growing demand for dollars and euros, the ruble exchange rate is weakening, and the outflow of foreign currency clients negatively affects the banking system. This leads to an increase in the influence of world markets on the Russian economy and a decrease in the tax yield of the state. Hoping to return capital to the interior of the country, the Central Bank is trying to make it difficult for individuals to enter foreign markets.

But there is also a positive trend – an increase in the level of financial literacy due to interest in the stock market.

“SP”: – Why do people not believe in Russian shares?

– Do not believe – it is loudly said. But in general, this is primarily due to low liquidity and small trading volumes in our market. In general, it can be characterized as spontaneous and unpredictable. And besides, investors want to protect themselves from the collapse of the ruble exchange rate with foreign exchange investments.

“SP”: – Those $ 10 billion that left Russia in a year, can they be returned back?

– As an option: to make the entry of individuals on the stock exchange more understandable and transparent, to minimize the influence of the state on the investment process. It is also important to increase the stability of the ruble exchange rate, increase the amount for tax deduction to individual investment accounts (IIA) and actively conduct IPOs of Russian companies.

Head of the analytical department of the financial company AMarkets Artem Deev believes that this year we should expect an inflow of investments in domestic securities.

– Russians buy shares of foreign companies and bonds, as they hope for a high yield of securities and stability of investments. Moreover, the share of such investors is relatively low, as stated by the Central Bank of Russia itself. Last year, our citizens began to withdraw funds from deposits, since the interest on them did not give tangible passive income.

As a result, the number of private investors on the Moscow Stock Exchange has almost tripled over the past year – from 3 million investors to 8 million. But at the same time, a large share of Russians still buy securities of Russian companies, especially the energy sector (leading producers of oil, gas, oil products, metals).

As the Russian economy begins to recover, as demand for domestic raw materials on world markets returns to pre-crisis indicators, the profitability of Russian issuers will begin to grow. That, accordingly, will cause an inflow of investments in domestic securities. This will be a natural process that will manifest itself already in 2021.

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