21 Sep 2018 12:20

Russia on threshold of boom in retail investment in financial market - central banker

MOSCOW. Sept 21 (Interfax) - Russia is on the threshold of a big boom in its citizens participating in the stock market, CBR first deputy chairman Sergei Shvetsov said at FinFair 2018.

"We see the current state of individuals getting into stock market instruments as just the start of a big boom. And while the figures genuinely impress, we have a very low base - the penetration of stock market services per capita is far lower than in China and I'm not even talking about countries such as the United States. We're standing on the threshold of a big boom," Shvetsov said.

There are several main reasons for this, he said. The bank margin that lenders take when they attract money from the public and issue loans can be split between the issuer and the investor, and this will be lucrative.

Russia has also created a rating industry that is intended to help choose instruments for investment.

In addition, barriers to individuals' access to stock market instruments have been removed recently, and it has become simple and easy to invest. In future, a marketplace will emerge that will make risk-free stock market instruments accessible to millions of people. Automation is taking place, software products are emerging that make it possible to invest more effectively.

The only constraint Shvetsov mentioned is low household incomes. "We can do everything possible, but if people have low incomes, have a hard time making ends meet, they won't pinch off a kopeck from this income for investment. Yes, they might have a kopeck to save for a rainy day, but it would not be right to demand investment from them," he said.

Deputy Finance Minister Sergei Storchak said that with Russians becoming more interested in the stock market, it is necessary to increase their financial literacy, otherwise this could give rise to another crisis like the one with homebuyers taking out foreign currency mortgage loans.

Moscow Exchange CEO Alexander Afanasyev said the exchange is seeing an increase in retail investors participating in the stock market. The number of individual investment accounts is 400,000, and private investors have significantly increased trading in OFZ federal bonds, corporate bonds and equities.

The head of the National Association of Stock Market Participants (NAUFOR), Alexei Timofeyev said Russians' increased participation in the stock market is related to the fact that big banks have joined the game by starting to offer their depositors alternative instruments.