Page 104 - RusRPTSept22

8.3 Stock market
8.3.1 Equity market dynamics
Out of about 27mn individual brokerage accounts in Russia 65% are inactive and contain no funds, Kommersant daily reported citing a research by Anderida Financial Group. Another 20% of accounts do not exceed RUB15,000 ($244), with only about 15% of individual investors holding over RUB15,000 on their brokerage accounts.
As followed by bne IntelliNews, while prior to the military invasion of Ukraine the massive inflow of retail investors supported Russian equity, the regulators are now concerned that unqualified individual investors will find it hard to navigate the heavily sanctioned financial market.
About 5mn Russians suffered from the freezing of foreign securities this spring. Of these, about 500 thousand were clients of VTB, which fell under sanctions on the first day of the war.
Russia’s Central Bank has limited certain speculative transactions on the stock market to maintain financial stability. In particular, depositories and registrars will not be able to transact in securities transferred from foreign depository or custodian accounts within six months other than those purchased prior to March 1, 2022, the regulator reported at the end of August.
Such six-month lock-up period is also applicable to securities bought by non-residents from friendly countries and controlled foreign companies (save for residents of the Republic of Belarus) from other non-residents in the period from June 25, 2022 to the date when a C-type depo account was reclassified into an ordinary depo account. In addition, depositories are ordered to ensure the segregation of such assets.
The restrictions are inapplicable to shares obtained by an investor as a result of the cancellation of depositary receipts provided the investor was holding them before March 1, 2022, the Central Bank noted. The novel restrictions will not apply to shares arising from the execution of a securities loan agreement or the second leg of a repo if the first leg provides for a transfer of depositary receipts proving the title to such shares. Other exemptions are transactions authorised by the Government Commission on Monitoring Foreign Investment in the Russian Federation.
About 5mn Russians suffered from the freezing of foreign securities this spring. Of these, about 500 thousand were clients of VTB, which fell under sanctions on the first day of the war.
These people were among the first to lose control over their investments and have been trying to figure out why this happened for months. They create groups in Telegram with telling names like “Showdown with VTB”, storm the offices of brokers and try to get an answer why they were not given the
104 RUSSIA Country Report September 2022 www.intellinews.com