Central Bank wants brokers to promote Russian equities
Retail clients’ money should work for the national economy
This year, Russian stock exchanges have seen an increased flow of private clients. While amateur investors are more interested in foreign stocks, the Central Bank appeals to brokerages to direct their customers towards local equities.
The Bank of Russia urged brokers to prioritise Russian stocks, reports Reuters. According to the Central Bank’s First Deputy Chairman Sergei Shvetsov, Russian brokerages should primarily offer retail clients Russian stocks to make their money work for the national economy rather than being invested in companies abroad. “It is very important that investment houses, brokerages [...] offer Russian stocks foremost,” he said at a stock market conference adding that at the moment, a bit more was being invested in foreign stocks than in Russian ones.
Coronavirus lockdowns and low interest rates have pushed a record-high number of Russian amateur investors into trading this year. Last week, Russia’s largest Moscow Exchange said that around 17,000 new retail accounts were opened daily, while the number of clients surpassed 8 million by the end of November. The bourse began offering access to shares from the US S&P 500 index in August. According to St Petersburg Exchange, this year, Russian investors have preferred US tech stocks, such as Tesla, Amazon and Apple.
Shvetsov considers that Russian stocks look attractive nowadays due to their high dividend yields. Although foreign stocks may also be part of an investment portfolio, “it is much more important for us that these funds work for the Russian economy”.
Russian stocks offer indeed one of the higher dividend yields in the world, but the falling rouble can discourage investors from buying Russian stocks. The national currency has lost nearly 20% of its value against the dollar in 2020. At the same time, the benchmark ruble-denominated MOEX Index has gained 3% so far this year despite strong volatility amid the COVID-19 crisis and falling oil prices.
Russian brokerages are against possible restrictions on purchases of foreign stocks, commented head of Otkritie Brokerage House Vladimir Krekoten adding that brokers would like to trade around the clock. Earlier, Moscow Exchange said it planned to offer more foreign securities denominated in rubles to ensure convenience for Russian investors.