Page 76 - RusRPTFeb22

at the end of last year. At the end of last year, foreign investors owned 20% of Russia's government bonds, compared to 35% at the peak of 2018.
However, sanctions imposed by Western countries have reduced Russia's access to foreign financing and, for example, Russia's dollar-denominated foreign debt has halved compared to the end of 2013. Russia has also sought to alleviate the vulnerability of the economy to possible new US sanctions by reducing its dependence on the dollar. At the end of last year, Russia owned more than $2bn worth of US government bonds, compared to more than $100bn in 2017. The dollar's share of Russia's total foreign exchange reserves has fallen from 45% to 16% and the export payment currency from 80% to less than 60% since 2013.
A four-day collapse on the Moscow Exchange tested the nerves of retail investors
Statistics from Moscow Exchange show that inflows from individual accounts reached a historical record in January: RUB101bn ($1.3bn). Local mutual funds invested another $100mn in Russian stocks. These numbers put to rest concerns that retail investors might have capitulated during the recent sell-off. Individual investors were buying the dip (and which stocks they bought the most). Inflows from retail investors will most likely continue.
Mid-January was perhaps the most vacuous of all the escalation of tension between Russia, the US and NATO - but investors on the Moscow Exchange are unlikely to agree with this. The lack of meaningful news and oil under $90 did not prevent a massive sell-off in the Russian market, which lost 4.5% in a week, and on Tuesday experienced the strongest collapse since March 2020. The main victims weremns of retail investors, whose number on the Moscow Exchange almost doubled over the past year.
The big sell-off on the Russian stock market began January 13, and continued for four trading sessions in a row, reaching a peak on January 18 - on this day, the Moscow Exchange index collapsed by 6.5% during the main session, which allowed analysts to state: all 2021 growth is lost.
In total, since January 13, by the end of this week, the Moscow Exchange index has lost 9.8%. At its peak the decline to close on January 12 was as high as 14%. After Tuesday's crash on Wednesday, the market rebounded a little, but the drop by the end of the week was still 4.5%. In fairness, it must be said that the US S&P 500 ended the week with the worst result since the start of the pandemic, but the Russian market fell for completely different reasons.
The collapse was not hindered by the fact that, from a fundamental point of view, the Russian market right now looks extremely attractive - all analysts agree on this. First of all, because of high oil prices: a barrel of Brent is trading at $88, and the Russian Urals on January 20 for the first time since 2014 overcame $90 per barrel. After the January correction, it is safe to say that the Russian market is now significantly undervalued - but as long as geopolitical tensions persist, any careless political movement could send it even lower.
If on January 13, a clear signal for a sell-off was an interview with Deputy Foreign Minister Sergei Ryabkov about the lack of results in negotiations with
76 RUSSIA Country Report February 2022 www.intellinews.com