Demand for foreign securities fell – Newspaper Kommersant No. 185 (7386) dated 10/06/2022

The volume of transactions on the “SPB Exchange” in September rolled back to a minimum of this year. The fall of the US market, the Central Bank’s strict restrictions on investing in foreign securities, as well as increased geopolitical risks cooled investors. The shares of Hong Kong companies, which are replacing securities from unfriendly jurisdictions, still occupy an insignificant market share, especially since infrastructure restrictions are imposed on them. However, participants expect to expand their number at the auction.

The volume of trading in foreign securities on the SPB Exchange in September fell by 36% to $5.85 billion, lower than in March this year. In part, the decrease in interest in this segment can be attributed to the fall of the US market: the S&P index lost more than 9% over the month, rolling back to the values ​​of November 2020, the NASDAQ Composite fell by more than 11%, returning to the values ​​from July 2020. In addition, the Central Bank is persistently pursuing a policy of restrictions for non-qualifying investors when investing in foreign securities. And that’s not counting the geopolitical risks that escalated at the end of the month (see Kommersant on September 23). However, the number of active accounts has remained stable for the past five months, around 350,000.

At the same time, the volume of transactions with securities from a friendly jurisdiction – Hong Kong shares – decreased in September by only 16% and amounted to HK $0.39 billion (about $50 million). The number of transactions amounted to 72.5 thousand, the number of active accounts – 15.25 thousand. So far, this segment occupies less than 1% (both in terms of trading volumes and in terms of the number of securities). However, as Kommersant was told at the SPB Exchange, since October 5, four shares have been added to the segment and now there are 16 securities in it. On June 20, SPB Exchange launched trading in shares of 12 companies listed on the HSE. It was planned to expand the list of available securities to 200 by the end of 2022, and to 1,000 during 2023.

The head of the department of the Internet broker in international markets “BCS World of Investments” Alexander Zuckerman admits that the decline is due to a slight decrease in the hype around Asian securities. According to Freedom Finance COO Galina Karyakina, some brokers closed the purchase of Hong Kong dollars. This affected the volume of trading in this currency on the Moscow Exchange: if in August the average daily volume of transactions was 500 million rubles, then in September it barely exceeded 400 million rubles. In early October, trading volumes in the Hong Kong dollar also remained low. In addition, since the beginning of the month, SPB Exchange has introduced a stamp duty – a re-registration fee paid by customers.

The main problem of Hong Kong shares is infrastructure, says Dmitry Alexandrov, managing director of Ivolga Capital. Against the backdrop of newly increased geopolitical risks, in his opinion, any non-transparent security chains frighten investors, because they “make the risk profile of the paper unacceptable: the possibility of a complete loss of capital due to blocking stands against a possible increase in quotations.” Therefore, in terms of infrastructure, it is necessary to build transparent and direct chains with Asian banks and depositories, but even this will not be one hundred percent protection. “As we see from the example of using the Mir system, even friendly jurisdictions are forced to refuse cooperation against the backdrop of pressure from Western countries,” he points out. Under the current conditions, Hong Kong bonds will continue to be in low demand, says Artem Mayorov, director of the asset management department at Ingosstrakh Investments.

Uncertainty is the main problem for the entire market today. Investors are not ready to make decisions in such conditions. The Hong Kong segment “first of all will be helped by if not improvement, then at least stabilization of the geopolitical situation,” Dmitry Alexandrov believes. However, according to Alexander Zuckerman, the expansion of the list of such instruments on the SPB Exchange will intensify interest and increase turnover in HSE-listed securities.

Ksenia Kulikova