Page 82 - RusRPTDec23

8.3 Stock market
8.3.1 Equity market dynamics
Russian retail investors demonstrated high demand for shares in 2023 the third quarter. As a result, the number of new individual investment accounts (IIAs), primarily opened with brokers, rose over the quarter. The total number of IIAs was up by 11% y/y. Contrastingly, the number of IIAs and the value of assets with trustees continued to decline as clients were withdrawing from large-scale standard strategies focusing on the bond market. Overall assets in IIAs increased by 3% over the quarter, reaching ₽519bn. The average amount of IIAs with trustees and brokers remained nearly the same, namely ₽210,000 and ₽82,000, respectively. Russian shares in the structure of assets accounted for 35%, which is the highest level since 2015, whereas the proportion of residents’ bonds contracted to 15%.
Foreign investors have left the Moscow stock market
The economic sanctions imposed as a result of the war of aggression started by Russia in March 2022 have changed the Russian financial market in many ways. One key change is the exit of foreign investors. Before the war, foreign investors (mainly large Western funds) accounted for about half of the trading on the Moscow stock exchange and about 20% of the government bond market. Sanctions imposed by Western countries and Russia's own measures to limit the sale of securities have practically expelled all foreign portfolio investors.
The consequences are visible in the market. Since there are hardly any large domestic institutional investors in Russia, the share of private individuals in trading on the Moscow Stock Exchange has been around 80% since the outbreak of the war. The volume of trading decreased sharply in spring 2022, at the end of last year the average daily turnover was only about 30bn rubles. This year, the good salary development and the gradual adaptation to the new reality have increased interest in stock investing. The average daily turnover has increased by about half compared to last year, but the volume of trading is still lower than the pre-war level. The exceptionally large share of private individuals makes trading difficult to predict.
Fewer changes in the bond market
Trading in the corporate and government bond market has been smaller than the stock market. In the bond market, domestic commercial banks are significant market participants, correspondingly, the share of foreign investors was smaller even before the war. About 9% of the banking sector's balance sheet is in government bonds and about 5% in other bonds. As a whole, the proportions have hardly changed during the war, but bank-specific information on the main items of the balance sheet is no longer available.
In total, about half of the ruble-denominated bonds in circulation are government debt, the other half is roughly equally divided between bonds of
82 RUSSIA Country Report December 2023 www.intellinews.com