Page 90 - RusRPTOct21

economy. Foreign funds, which have a clear preference for growth, will be the mainuyers in these placements. These purchases will finance the sale of large value stocks. Retail investors, in turn, are hungry for yield and willeuying value names.
MOEX gets ready to get into the game of offering global equities to Russian retail investors. MOEX's management outlined the exchange's plans for developing its global equities business over the next few years. Currently, while global equities account for 53% of equities ADTV in Russia (which totals $3bn), the share of the total global equities traded on MOEX is just 1% of total equities ADTV (the bulk is traded on the St Petersburg Exchange). MOEX expects the equities ADTV to expand to $5-7bn in 2022-23, with its share of global equities trading rising to 50% or more, and hence circa 30% of total equities ADTV coming from MOEX-traded global equities.
How does MOEX plan to grow its share of this business? In addition to its existingest-in-class IT, clearing and settlement, and compliance, the main new growth drivers that the management talked about are: (1) increasing the number of traded foreign equities from around 280 now to 2,500y end-2022 (including around 100 ETFs); (2) expanding the geographies covered, in particular to Asia (such as Hong Kong and China); (3) introducing Links technology the end of this year, which will greatly enhance liquidity provision for foreign equities trading adding the leading Russian Brokers and largest foreign HFTs; (4) enabling trading of foreign equities in either dollars or rubles (currently only ruble trading is available); and (5) providing automated taxation services. MOEX also expects business benefit from synergies with other business lines, particularly derivatives.
The other financial target mentioned was having the contribution of global equities to MOEX's F&C income at 5-7%y end-2023. This would imply roughly R3bn of fee income from this source then.
MOEX's team also commented on the very strong demand for equities from retail investors, with 13.8mn retail clients onboarded August 2021, of which around 15% are active investors. They accounted for around 40% of equities trading volumes and held R1.9 trillion of equities at end-1Q21, with investors fully turning over their portfolios every two months. According to MOEX, the top threerokers have 51% of retail equities trading volumes, ledy VTB (22%), Sber (17%) and Tinkoff (12%).
Moscow Exchange has published retail investor statistics for August.
Somewhat surprisingly, there was no seasonal deceleration in retail investor activity. Retail investors sought R28bn ($380mn) worth of Russian stocks.
Inflows into local funds continued as well. R22bn went into all funds, and of that amount, we estimate that R14bn ($190mn) went into Russian stocks. Given that there were no share placements in August, we can assume that the $570mn inflow from local investors was matchedy a similar outflow from foreign funds.
90 RUSSIA Country Report October 2021 www.intellinews.com