Financial analysts named options for protecting savings from ruble depreciation

In the current conditions, deposits are the undisputed favorite of private investors,” Bogdan Zvarich, chief analyst at Banki.ru, told MK. According to him, in addition to high rates, which make it possible to beat annual inflation, ruble deposits are simple and understandable to the population. They do not bear risks within the insured amount (RUB 1.4 million – Ed.)

“Under the conditions of the Central Bank of the Russian Federation’s strict monetary policy, bank deposits in rubles are twice as fast as official inflation in the country: the highest yields on short-term deposits reach 16% per annum, with inflation as of January at 7.44% in annual terms and forecasts for the end of this year in 4.5%,” noted Freedom Finance Global analyst Vladimir Chernov.

Another way to protect against the depreciation of the Russian national currency, in his words, is bank deposits in foreign currency. Thus, deposits in Chinese yuan bring a profit of about 3-4% per annum, plus the growth of the exchange rate itself. “There is no point in holding cash in American dollars and euros, because… they do not bring any passive income, except for exchange rate differences,” Chernov added.

Replacement bonds

As independent financial expert Andrei Vernikov believes, over the long term, investing in gold has a chance of beating inflation: “When buying bars and coins, we are forced to turn a blind eye to high spreads (the difference between buying and selling – Ed.). The best instrument for buying gold is a contract for the purchase of gold with settlements “tomorrow” on the Moscow Exchange, where spreads are minimal.” “Investing in gold has traditionally been a hedge against inflation, but carries high costs, especially over a short-term investment horizon,” Chernov recalled.

It is known that in order to reduce the risks of high volatility and weakening the value of the Russian national currency, it is necessary to hedge your investment portfolio with financial assets that will rise in price at such moments. Previously, one of such assets were corporate Eurobonds of Russian companies denominated in foreign currencies. Coupon income on them was also credited to accounts in foreign currencies, which offset the fall in the ruble exchange rate. After the imposition of sanctions against NSD, these securities were blocked in the European depositories Euroclear and Clearstream. Therefore, issuers issued replacement bonds that correspond to the basic parameters of the Eurobond issue, but are stored in the Russian infrastructure and the income on them is paid in rubles at the Central Bank exchange rate on the day of the operation.

According to Vladimir Chernov, today there are 45 issues of replacement bonds on the domestic loan market, with an annual yield of 6–12% and a coupon rate of 4.5–6.0%, which will completely allow one to outpace the average annual inflation rate in the country and protect from the depreciation of the ruble. “Exchange-traded funds for replacement bonds are also a good option, they will simply collect several such issues at once and investments in them will be more diversified, but this does not play a big role in the fixed income market,” the analyst explained.

Investments in shares of Russian companies on the stock market also look attractive. Especially if you choose companies with high dividend payments. “Currently there are issuers on the Moscow Exchange that pay dividends with a yield of 10–12% per annum, which will outpace the average annual inflation rate in the country. But this type of asset is considered risky and may cause losses if the issuer’s securities quotes decline, and therefore does not provide a guarantee of hedging the risks of a weakening ruble,” Chernov said.

Fashion for advanced “physicists”

According to Digital Broker analyst Natalia Pyryeva, it is now worth paying attention to companies that benefit from the weakening of the ruble and receive foreign currency earnings. First of all, these are oil workers, representatives of the transport sector, who have become beneficiaries of the turn of foreign trade to the East, and gold miners.

But in general, according to Pyryeva, you need to be careful with the stock market. Because high rates are negative for the stock market. Especially considering the fact that the Moscow Exchange index showed almost continuous growth throughout 2023, and now looks overbought. In her opinion, in the current circumstances, issuers with a high credit burden on short-term loans will experience difficulties. One should also look at developers with caution: the real estate market is already quite overbought, mortgage rates are high, control by the Bank of Russia is high, so the analyst expects that sales volumes of developers will shrink throughout the year.

As Andrey Vernikov noted, despite the correction at the end of February, many stocks do not seem cheap now. He believes that in the first half of the year, bonds of reliable companies and federal loans look more interesting – their yield is higher than dividend payments on shares.

The time of high rates is favorable for the debt market. Natalia Pyryeva prefers floaters from high-quality issuers and OFZs, which now provide double-digit returns. In her opinion, in 2024, private investors should also take a closer look at replacement bonds, especially government Eurobonds, which were planned to be placed back in 2023, but due to the workload of the placement organizers, the procedure was postponed.

Among the assets tied to the currencies of friendly countries, yuan bonds are interesting, Vernikov noted: “They can be bought on the Moscow Exchange. Bond yields are up to 16.5% per annum, but it’s better to buy reliable ones with a yield of around 5%-6% and sleep peacefully.”

According to Zvarich, the Central Bank’s tight monetary policy creates favorable opportunities for IPOs. At high rates, this source of funding for issuers is often more profitable than investing in bonds. So he expects a surge in IPO activity in the first half of the year. About 15 Russian companies have announced plans to go public. So the fashion for IPOs among advanced “physicists” may return to Russia.

“Cooling” of housing

But the attractiveness of the traditional investment instrument for Russians—buying an apartment for rent—has noticeably faded. The profitability of this type of investment by the beginning of 2024 reached only 5.8% per annum. This year, Vladimir Chernov expects a cooling in the primary housing market against the backdrop of the end of the state program for preferential mortgages from July and an increase in bank requirements for borrowers. “While the preferential programs are in effect, the housing market is greatly overheated, but upon their completion, prices per square meters may go down,” Chernov noted. Natalia Pyryeva advises private investors to wait to buy apartments until real estate prices adjust from current highs against the backdrop of shrinking effective demand.

However, real estate remains a stable and reliable asset. In addition, a worthy alternative to investing in new buildings has emerged in this sector—investing in commercial real estate through the purchase of shares in closed-end mutual investment funds (CLIF). In 2023, such funds in terms of profitability looked clearly more attractive than income from the direct purchase of real estate with its subsequent rental.

According to Vladimir Stolnikov, head of the alternative investment management directorate at Alfa Capital Management Company, private investors should pay special attention to Light Industrial (premises for light production, organization of storage, office and showroom in a single space – Ed.). First, this undervalued segment of the warehouse market is booming thanks to the growing popularity of e-commerce. Recently, a number of large developers have entered it with serious investments. Secondly, the entrance ticket here is inexpensive thanks to closed mutual funds. Thirdly, the payback period for such projects is short. Construction takes a year and a half. Moreover, already at the excavation stage, about 50-60% of the warehouse space is either sold or leased.

As MK learned, in the second quarter several management companies plan to create closed-end funds aimed at attracting funds from citizens to Light Industrial.

It’s better not to take risks

Vladimir Chernov recommends diversifying your financial savings: “Regularly review your investment portfolio, adjust the shares of assets depending on the monetary policy of the Central Bank. Focus most of your investments on risk-free fixed income assets.”

“The main advice for investors is to stay away from stocks and bonds of small companies and invest not only in ruble assets, but also in gold and in the currencies of friendly countries, in assets pegged to the currencies of friendly countries,” says Vernikov.

The Central Bank intends to hold the key rate for a long time, which will deal the greatest blow to small companies not related to the military-industrial complex. Many small issuers can place bonds at 18-20% per annum on the Moscow Exchange, but their business is not so profitable to justify such highly profitable placements. “Therefore, investors should be wary of purchasing high-yield bonds from small and medium-sized companies. It’s also better to avoid shares of such companies,” the analyst concluded.