Sharp rise in private investment worries Russian authorities

RUSSIA / FSU POLITICS - In Brief 30 Nov 2020 by Alex Teddy
Retail investors have started investing in stocks as they seek better returns due to ever reducing bank interest rates. The Central Bank of Russia (CBR) is perturbed that this will jeopardize the financial sector.There has been high inflation since the early 1990s. There have been high bank deposit rates. The key rate is now only 4.25%. Bank deposits used to offer high interest rates people who seek to protect their cash against savings. Inflation was often over 10%. Putting money into a bank is no longer as alluring as it once was.Investment in stocks has speeded up throughout 2020 according to CBR. Q3 broke records with 1.6 million new clients signed up to brokers. That took the total number of retail investors to 7.6 million. The number of brokerage clients has increased more than twofold in 2020. A tax friendly investment account, the Individual Investment Account (IIA), is available. The number of IIAs has increased 250% since September 2019. There are now 2.9 million of them. Over 0.5 million were opened in Q3. In October 2020 the Moscow Exchange broke records in the stock market. It is struggling to meet demand from retail investors.In August 2020 Russia allowed people to buy foreign listed companies. In November 2020 the daily turnover in foreign listed stocks reached USD 20 million. Private investors make up 43% of trading. It was just 34% in 2019. The government often tried to get ordinary people to invest. It did not succeed until now. In March 2019 the ten main commercial banks offered an average deposit rate of 7.7%. That was 4.35% in October 2020. That is a shade above inflation. The volume of RUB deposits is still rising. It is up to USD 14.5 billion thu...

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