And they named the most attractive instruments
The CBO that began a year ago in Ukraine and the subsequent Western sanctions against the Russian Federation hit hard on the value of private investors' assets in the stock market. At the same time, some alternative investments, on the contrary, pleased private investors, adding to the price. What financial instruments in turbulent times can save savings from high inflation?
The past year disappointed stock market participants: over the course of 12 months, the ruble index of the Moscow Exchange fell by 43.3% to 2,147.06 points, while its dollar equivalent, the RTS index, lost 41.29%, reaching 936.8 points. The shares of Polymetal (-81%), VTB (-65.5%) and Yandex (-60.3%) lost the most in price. And only one company from the Mosbirzh index was able to go positive — Phosagro, which went up by 8.6. After the introduction of currency control and the ban on foreigners selling Russian securities, the dynamics of the domestic collective investment market actually broke away from global trends.
The huge drawdown of securities quotes of leading Russian companies, in theory, should have opened a “window of opportunity” for private investors. You can make good money on index recovery. But not everything is so simple. High risks remain in some sectors. “This year, the volatility in the ruble is likely to be even higher than in August-November 2022. This reduces the potential profit from investing in exchange-traded foreign exchange instruments (stocks, bonds, ETFs),” an expert on stock market «BCS World of Investments» Yevgeny Mironyuk.
If we adhere to the forecast of state departments, according to which the ruble will remain close to current quotes against major currencies during the year, then mixed investment portfolios (from foreign stocks and bonds in proportion, for example, 60/40) are preferable, the analyst believes. All profits will be taxed subject to currency revaluation. Profitability in foreign currency with a high degree of probability will allow to surpass inflation in euro/dollars/yuan. For a retail investor, from the point of view of the risk-return ratio, it is preferable to invest in these assets through mutual funds.
Mutual funds are good for those who do not want to dive into the study of a subject called «investment». These tools are more suitable for long-term investment,” said Alexander Tsyganov, director of the investment and corporate business department at Tsifra Broker, to MK. According to him, bonds can also give good returns, but they are more suitable for conservative investment. “Stocks will also be able to beat inflation if the investor has good management experience. Now is a rather risky time, requiring serious control over the risks of portfolio drawdown. At the moment, you can pay attention to the shares of metallurgical and technology companies,” the specialist believes.
Eduard Kharin, head of the directorate for work with shares of Alfa Capital Management Company, advises focusing on domestic sectors: finance (according to his forecast, only the largest state-owned bank by the end of 2023 can earn under 900 billion rubles), telecom and retail, which have a stable cash flow , and partly ferrous metallurgy. “Oil workers, despite the embargo from unfriendly countries, are in a good situation, they just have the risk of new taxes,” Kharin added.
“If you expect the devaluation of the ruble, then it is wiser to keep funds in foreign currency in bank accounts/deposits, as this will partially prevent the currency revaluation of savings for taxation,” Mironyuk is sure.
According to the Central Bank as of December 1, 2022 year, deposits in foreign currency, despite extremely low rates, accounted for 21% (8.4 trillion rubles) of all deposits of the population (40.1 trillion rubles).
Ruble deposits have always been considered the most reliable financial instrument. But today they are not profitable. For ruble deposits, the average rates now fluctuate around 6-8% per annum, for savings accounts — 5-6% per annum. This is below official inflation. And if we take into account the new tax on the income of individual depositors introduced this year, then ruble deposits will bring losses.
Alexander Tsyganov advises keeping part of the savings in cash and non-cash dollars and euros. During previous crises, the currency stash saved Russians from losses more than once.
A proven anti-crisis tool is investment in gold. It is known that interest in precious metals, as well as in the shares of the sector, is growing against the backdrop of high geopolitical risks and instability on international exchanges. Recently, gold quotes have been rising against the backdrop of active purchases by central banks and expectations of a further increase in the Fed's base interest rate.
According to VTB Managing Director Vladimir Kochka, today there are several ways to buy gold. First, bullion is the real asset. From March 1, 2022, the tax on the purchase of gold bars has been abolished, such purchases in banks are no longer subject to VAT. In addition, in 2022–2023, an investor does not pay personal income tax on the sale of an ingot if it has been owned for less than 3 years. The disadvantages of the instrument include the spread between the purchase and sale prices, as well as wear and tear — in case of damage, the cost of an ingot decreases by 10–20%.
Recently, investment coins have also been in high demand. Often they are bought as a non-standard valuable gift. However, with a short-term investment, the investment can become unprofitable. The negative factors are the wear and tear of the coins and the possible costs of safe maintenance.
An impersonal metal account (OMA) has a high level of reliability of saving funds with the prospect of their increase. The asset does not require transportation and storage costs, is not subject to VAT, makes it possible to make transactions with metal at any time. However, CHI is not insured, unlike deposits.
Gold futures are considered to be a highly liquid instrument with a low commission and spreads for buying and selling. But the asset is aimed at experienced traders, as it allows you to make big profits through leverage. For ordinary investors, investing in futures is dangerous.
Investments through ETFs and BPIFs on the Moscow Exchange allow you to invest in the shares of all gold mining companies included in the index. In this case, the value of the fund's assets is linked to the price of gold. The high liquidity of the instrument contributes to the establishment of low spreads for buying and selling. But here it is necessary to decide on the choice of strategy (long-term planning or short-term speculation). When choosing a fund, it is also important to pay attention to the commission.
“It is more profitable for private investors to invest in precious metals through mutual funds, remote control, shares of miners and processors, the GLDRUB_TOM contract on the Moscow Exchange. The physical purchase of metal and precious stones is only interesting in the long term, in this case, the investment income compensates for the high difference in the purchase/sale price, ”Evgeny Mironyuk emphasized.
Experts believe that it is reasonable to invest in gold about 5-10% of the size of the investment portfolio.
For a long time, capital apartments also had a solid investment potential. This choice is supported by the high liquidity of the asset. If necessary, Moscow «squares» can be quickly sold without any problems. “Over the past 4 years, due to the introduction of escrow accounts, preferential mortgage programs and the emergence of political risks, “abnormal prices” for housing have been observed,” said Ekaterina Berezhnova, chief analyst at Miel Group. How the market will develop further is difficult to predict. However, the expert does not recommend buying real estate for the purpose of resale this year, as prices for secondary housing have begun to decline.
This trend will soon spread to the primary market. The volume of supply of Moscow new buildings and prices for apartments are at their maximum, and the purchasing activity against the background of falling incomes of the majority of Russians is steadily falling. To stimulate sales, developers offer super discounts in order not to officially reduce the price tag. According to Oleg Repchenko, head of the Real Estate Market Indicators AC, this year the cost of housing in the Moscow region is likely to creep down.
Alexander Tsyganov agrees with this opinion, who, in the current economic situation, to invest in housing, he advises to be very careful: “Residential real estate is a reliable source of investment for a long time, but now the market does not seem stable, a period of price correction is possible.”
It must be remembered that any investment has risks, so they should be treated seriously. “Invest when you have available funds, do not invest the last money. Choose those instruments, market sectors, companies that you understand. And if you don’t know, then take the time to study the subject. If there is no time and desire for this, it is better to seek help from professional managers and brokers who will help you compile an investment portfolio depending on your tasks, opportunities, timing and degree of risk tolerance,” Alexander Tsyganov concluded.