Page 4 - bne_newspaper_April_19_2019

Top Stories
April 19, 2019 www.intellinews.com I Page 4
Bank of Ukraine (NBU) with 44.5%. Foreign investors account for a tiny 3.3% of the total, but that is already up from nothing two years ago. Last year the share of foreign investors' holdings went up 600% to the current total of $512mn in the first quarter and UAH19.5bn as of April 1, 2019.
And with the advent of Clearstream it will grow
CEO who led revolutionary change at Moscow Exchange steps down but strategy to remain the same
The biggest change was the merging of the dol- lar denominated Russia Trading System (RTS) and ruble denominated Moscow Exchange Index (MOEX) into one hosted on the same platform, although the ruble and dollar indexes remain dis- tinct. At the same time the two associated deposi- tories were merged and a single central deposi- tory created to clear and settle all trades. Finally, Afanasiev oversaw hooking Russia’s exchanges into the Clearstream and Euroclear international payment and settlements systems, allowing inter- national investors direct access to Russia’s stocks and bonds from dealing desks around the world.
The tie up with the international settlement services had a radical effect on Russia’s financial markets, as billions of dollars flooded into the Russian bond market and today foreigners account for 30% of all the outstanding OFZ treasury bills.
The ease of access for foreign investors also effectively killed off many of the independent investment banks, which used to earn fat fees
more. In the first two years after Russia opened its bond market to the outside world foreign investors sunk over $20bn into Russian fixed income instruments. If Ukraine follows a similar trajectory then foreigners could invest up to $4bn into Ukraine’s domestic market in the next two years, which will allow it to comfortably meet
all its obligations over the next five years.
from trading on the Russian exchanges on their clients' behalf. Stephen Jennings, the former CEO of Renaissance Capital talked about a “killing zone” in between the barbell weights of the really big banks and really small banks, assuming Renaissance was at the big end, only to fall victim in the killing zone himself. Ruben Vadanian’s Troika Dialog was sold to state-owned Sberbank to become its investment arm Sberbank CIB.
Today the Russian stock market plays an important role as a source of funding for the government as it can now increasingly tap international capital by issuing ruble-denominated bonds and thus reduce its exposure to FX risk. That has been a boon
and allowed the Ministry of Finance to keep its Eurobond issues, the usual way for emerging market governments to raise international capital, to a minimum.
The markets are also an important source of capital for companies that have raised money to fund their growth. Shoe retailer Obuv Rossii, that caters to Russia’s middle classes living in the regions, raised $105mn with an IPO in October 2017 to fund the ongoing rollout of new stores and has seen its business grow steadily since.
And the domestic exchanges will underpin the development of Russia’s pension and insurance businesses, which still largely lays ahead of the domestic financial industry.
MOEX' board of directors have proposed Denisov to replace Afanasiev, though the appointment