Russia set to attract retail investors in record numbers, lobby group says

MOSCOW — Russia is on track to draw in a record variety of retail financiers in 2021 regardless of an expected increase in rate of interest, the head of the National Association of Stock Exchange Individuals (NAUFOR) lobby group stated.

Russians turned significantly to stock exchange trading throughout the COVID-19 pandemic in 2020 as the reserve bank cut its essential rates of interest to a record low, making it less appealing to simply keep deposit.

Alexey Timofeev, head of NAUFOR, informed Reuters in an interview that he anticipated the development in the variety of individuals trading to continue which the variety of brand-new retail financiers in Russia was most likely to match the record increase of 2020.

In 2020, Russia’s biggest bourse, the Moscow Exchange , saw a boom with almost 5 million brand-new retail financiers, taking the variety of accounts signed up to 10 million.

The Saint-Petersburg Exchange, Russia’s second-largest bourse and the primary platform for trading foreign stocks, likewise saw trading volumes of foreign securities reach a record high after the reserve bank cut rates to an all-time low last July.

“The influx of investors will continue this year. Will the number of accounts double? Maybe. We hope that the overall amount of funds in retail investors’ deposits will increase substantially,” Timofeev stated.

NAUFOR states its primary function is the development of a beneficial environment for financial investments in Russian monetary markets and of conditions for the healing of the Russian economy.

Russians have some 6 trillion roubles ($79 billion) purchased monetary market instruments, according to the reserve bank. However around 75% of all open brokerage accounts have less then 10,000 roubles ($131.64) in them, according to NAUFOR information.

The rouble-denominated MOEX index got 8% in 2020, touching all-time highs, making it an appealing financial investment as the rouble diminished 16% versus the dollar and with deposit rates near 5%.

The development in need for retail trading showed a worldwide pattern as rate of interest plunged, and the pandemic triggered individuals to invest more time online. Retail financiers represented 5.6% of the Russian population in late 2020 versus 10.6% in China, 1.4% in Turkey and 0.8% in Brazil.

The Bank of Russia is commonly anticipated to raise rates this year to attempt to check inflation after increasing its essential rates of interest this month to 4.5% from a record low of 4.25% – the very first rate modification because last July.

Timofeev stated greater rate of interest and a market sell-off were not likely to put brakes growing in the variety of retail traders.

“Even a possible (downside) correction won’t stop this inflow. In such cases we see very pragmatic behavior by retail investors who step into the market and increase their investment,” Timofeev stated. ($1 = 75.9650 roubles) (Composing by Andrey Ostroukh, Modifying by Katya Golubkova and Timothy Heritage)

Jobber Wiki author Frank Long contributed to this report.