Profitable choice: what is the reason for the record growth of the Russian stock market

At the auction on Monday, January 13, the Mosbirzi index updated its historical maximum. The stock indicator increased by 0.26% and for the first time since the observation (since 1997) rose above the level of 3132 points.

Since the beginning of the year, the Russian securities market has continued strong growth, which started last year. So, in 2019, the Mosbirzhi index immediately added 28.5%, and the volume of trading in stocks and bonds increased by almost 54% - up to 3.5 trillion rubles. This is stated on the official site of the site.

Experts attribute such growth to a record influx of private investors into the country's stock market. At the end of 2019, the number of customers on the Moscow Exchange doubled and reached 3.86 million people. At the same time, the number of client accounts on the St. Petersburg Exchange almost tripled - up to 3.06 million.

The Russians began to leave for the stock market en masse after a marked reduction in interest rates on bank deposits. This was told in an interview to RT by the head of the investment department of “BCS Broker” Narek Avakyan.

“Traditional for most Russians, methods of investing are becoming less profitable. So, at the end of December, the maximum rate on deposits in rubles at the ten largest banks in Russia fell to a historic minimum of 6% per annum. Clients started looking for alternative investment options, and therefore now we see high activity in the stock market, where there is a wide selection of investment tools and high profitability, ”Avakyan explained.

The decrease in bank rates on deposits is associated with the actions of the Central Bank. In 2019, the regulator lowered its key rate five times - from 7.75% to 6.25%. By this decision, the Central Bank intends to stimulate business activity and economic growth. Experts did not rule out that in the long term, decisions by monetary authorities will lead to cheaper loans, an increase in domestic demand and investment.

The desire of citizens to invest in the stock market helps to improve financial literacy in Russia, says Mikhail Kogan, head of the analytical research department of the Higher School of Financial Management.

“Bank deposits still allow you to save the accumulated funds from inflation and earn money. Nevertheless, citizens are already accustomed to double-digit interest rates, which has become an incentive to increase financial literacy and explore the opportunities offered by the stock market, ”explained Kogan RT.

The popularity of securities trading in Russia was also affected by the development of financial technologies. As interest rates on deposits decreased, banks began to actively develop applications and services for trading on the exchange.

“Many banks are actively developing trading applications available on smartphones and intuitive to people. Clients have the opportunity to make transactions in a few clicks, without delving into the analysis of charts and arrays of market data. This is what attracts many new buyers who do not want to devote considerable time to trading and install classic trading programs on a desktop computer, ”Dmitry Alexandrov, chief strategist at Univer Capital, told RT.

Paper set

45% of private players in the stock market prefer to invest their money in government or corporate bonds, Vladimir Krekoten, head of Otkritie Broker, told RT.

Recall that bonds are debt guaranteed by the government or company. Investors buy securities and receive a stable income on them. In other words, bondholders lend their money to a business or government. As Narek Avakyan emphasized, now the yield of some bonds in Russia exceeds 10% per annum.

More risky asset for investment are stocks. Securities give the owner the right to receive part of the company's profits, but do not guarantee the investor a stable income. So, the value and profitability of a company's shares directly depend on the efficiency of the business. Nevertheless, today the dividends of large Russian companies remain one of the highest in the world.

“The attractiveness of Russian shares lies precisely in the large dividend payments on blue chips (shares of the largest and most reliable companies. - RT ). In 2019, Russia again took first place in terms of payments - dividend yield averaged 6.23%. At the same time, the global average value was only 3.2%, ”Ivan Kapustyansky, a leading Forex Optimum analyst, said in an interview with RT.

However, according to experts, the share of Russian citizens playing on the exchange is still significantly lower than other countries.

Meanwhile, experts predict an increase in the involvement of Russians in the stock market in the coming years.

“Now the number of retail investors at Mosbirz is about 4 million people, which is less than 5% of the economically active population of Russia. Moreover, in the USA the corresponding indicator exceeds 60%, in the EU - 40-60%, and in China - 20%. Therefore, in the coming years, especially against the background of the expected further reduction in rates on bank deposits, the number of trading accounts will continue to grow at a very fast pace, ”added Narek Avakyan.

According to experts interviewed by RT, over time, the growing popularity of the securities market among Russians can positively affect the country's economy. First of all, analysts predict increased business activity.

“The beneficial effect for the Russian economy is becoming increasingly apparent. Companies from the small and medium-sized business segment are increasingly receiving investments directly from financially active citizens and are doing this through regulated stock market instruments, ”concluded Dmitry Alexandrov.