The Russian stock market reached one-and-a-half-year highs in the second half of the year
Since the beginning of 2023, the growth has been about 50 percent. According to analysts at BCS World of Investments, this is far from the limit. But for investors, as before, diversification is very important. This is evidenced, in particular, by the fact that more and more Russians are seeking to obtain the status of a qualified investor, which significantly expands their opportunities.
The public's interest in investing in stock instruments remains high. The number of brokerage accounts on the Moscow Exchange in January-September of this year increased by 4.5 million – from 23 to 27.5 million, and the number of active investors making transactions regularly during the same time increased from 2.2 million to 3.5 million. Today, according to analytics from the Central Bank of the Russian Federation, approximately every third economically active Russian has a brokerage account.
After non-residents left the Russian market last year, retail investors became its main participants and most influential force. The current share of individuals in stock trading is more than 80%, and the total value of assets in citizens' brokerage accounts exceeds 8 trillion rubles. In September alone, individuals purchased shares worth almost 30 billion rubles.
The influx of fresh private capital increased market liquidity, and the Moscow Exchange index recovered approximately half of the decline caused by geopolitical events in early 2022. This was the longest period of growth in the history of the domestic stock market.
“The rise in stock indices attracts more and more private investors to the stock market. We see a healthy, harmonious rise based on fundamental factors and trends, many of which will remain relevant in the medium term. We are also seeing a high demand for advice from professional financial advisors, who help choose the best instruments for both beginners and experienced investors, depending on their specific goals. The investment process among clients is becoming more and more conscious, and this cannot but rejoice,” notes Stanislav Novikov, Deputy Chairman of the Board of the financial holding BCS World of Investments.
12 months on the horizon the Moscow Exchange index is predicted to grow to 4,300 points, that is, by about a third from current levels.
Among the positive aspects, the high dividend yield of the Russian market stands out. Next year it is forecast at 10%. According to Novikov, more and more companies will return to paying dividends, primarily in the metallurgy and mining sector.
In addition, after a pause, large businesses began to disclose their financial statements. Financial data and top management forecasts allow investors to make trading decisions with more confidence and reason. Moreover, the financial and production results of many issuers please shareholders. Experts note that the market as a whole is improving in terms of corporate governance, transparency is increasing, and the redomiciliation of Russian business to their homeland is underway.
The stabilization of the ruble exchange rate is also positive for domestic companies. A more stable exchange rate of the national currency, which the financial authorities are striving to achieve, can support enterprises focused on domestic demand and have a favorable effect on the profits and dividends of companies, Novikov explained.
Finally, the dynamics of the stock market reflect the favorable development of the macroeconomic situation. The Russian Federation's GDP, as predicted by the Central Bank, will grow by 1.5-2.5% by the end of 2023. At the same time, the foreign trade balance is gradually normalizing and the budget deficit is decreasing.
However, not only Russian securities are in active demand. Country and currency diversification is still important to investors. True, only qualified investors have access to a number of foreign financial instruments.
“According to our observations, the shares of those who invest in Russian and foreign assets are almost the same among clients with “quala” status,” said the deputy chairman of the board of BCS. It is noteworthy that the main part of the portfolio growth in the market as a whole is observed precisely among qualified trading participants – if in the first quarter of this year they owned 69% of assets, then by the end of the second quarter it was already 73%.
As a rule, such investors follow the principle of maximum diversification; their portfolios contain many different securities. “We conducted a study among our clients and found that 60% of the “quals” have at least 26 securities in their portfolio. It is clear that the greater the capital, the greater the ability to distribute assets. But in general, it is extremely important for all client segments,” Novikov noted.
More than 600 thousand people currently have “quala” status on the Russian market, and their ranks are actively growing. At the end of June, there were 39% more such investors than a year earlier. You can obtain qualifications, for example, by the volume of assets or by the turnover of your trade. In the second case, investors manage with smaller amounts of assets, but they are required to confirm regular trading throughout the year with a certain turnover.