Get abroad at any cost – Kommersant FM
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Russian investors have not lost interest in foreign markets, although transactions with securities of foreign issuers have become much more difficult. In November, the St. Petersburg Exchange, which was the most popular channel for trading, came under American sanctions. After this, Russians actually have only two ways to invest in non-resident securities.
You can invest through Russian brokers who use international infrastructure, and through foreign companies. In the first case, you have to obtain the special status of a qualified investor. The second way is available to any individual, but with reservations. Will it be possible to trade foreign instruments in 2024? And how practical is this? “Kommersant FM” discussed this issue with Andrey Lisin, an investment consultant from the Central Bank register:
“Firstly, some Russian brokers still offer access to foreign securities, albeit limited, including Tinkoff, BCS and Finam. But this comes with certain risks of subsequent frosts. The second option is the CIS countries, brokerage companies of Kazakhstan and Armenia. Most likely, this and next years this route will be the most popular.
You need to understand that opening new accounts becomes problematic. Banks and brokers are demanding more and more documents. If you have any options to obtain a passport of another country or a residence permit (or you already have them), then it is logical to use brokers from non-CIS countries. For example, Interactive Brokers, Just2Trade, Cyprus Exante. But there are quite a lot of different “buts” that need to be overcome in order to meet the parameters by which the broker will open a new account. My colleagues and I actively invest in non-public, but already strong companies at earlier stages of business. We have interests in companies registered in the USA, Hong Kong and the European Union.
If you want to diversify across currencies, but there is no opportunity, then you can simply look at Russian assets through a currency prism.
For example, if we invest in shares of Russian exporters, then to some extent we hedge the risk of a weakening ruble. The weaker the ruble, the better it is for exporters, and, accordingly, they will earn additional profits and theoretically grow. But, of course, you should understand that in this case you still take on the state risk and remain within the same field. Therefore, if capital allows, then it is better to try to organize an alternate airfield in another country.”
At least in foreign markets there is no need to be afraid of volatility, say investment consultants. For example, the American S&P 500 index, according to Morgan Stanley forecasts, will end 2024 at approximately the same levels as the previous year. Analysts recommend investors pay attention to the securities of fast food restaurants, entertainment companies, energy giants and payment systems.
Not only individuals, but also legal entities are looking at foreign assets. Last year, more than five corporations went public in Russia, although for the entire 2022, only one structure decided to list on the stock exchange—the scooter rental company Whoosh. Moreover, business seeks to conduct an IPO not only within the country, notes managing director of the investment company Ivolga Capital Dmitry Alexandrov:
“A number of companies have announced their intentions to conduct cross-listings, that is, to be placed both on foreign sites and in Russia. If we talk about friendly exchanges, then this is in Kazakhstan. In 2023, we saw not so much IPOs there, but forced relocations. In particular, Polymetal was listed on the AIX exchange, and there we already see a fairly large discount on the price on AIX compared to prices on the Moscow Exchange. This is largely a consequence of the lack of investors on this site. From this we can conclude that it is impossible to attract any significant volume in Kazakhstan relative to the Moscow Exchange.
If we consider more developed markets – China or the UAE, then both countries comply with the sanctions regime. Accordingly, for any Russian company entering, for example, Hong Kong will now be quite risky.
Since its inclusion in the SDN list can mean many problems with settlements with shares or with depositary receipts. We do not yet see a great desire of Chinese banks and investors to enter into Russian assets. Probably, for now this is only a theory that is unlikely to be realized in 2024-2025. The situation with the United Arab Emirates is in some ways similar, and maybe even tougher.
It’s probably not worth waiting for foreign IPOs in 2024. Maybe there will be some stories similar to “Polymetal”, that is, forced moves in the format of redomiciliations. Or some experiments for small amounts to test the market. But as a full-fledged way to locate, I think this is not interesting for Russian business.”
Until February 2022, about 10 Russian companies were thinking about listing abroad, Kommersant FM interlocutors estimated. These were mainly enterprises from the sphere of agriculture, construction and technology corporations. After a year and a half, they all began to revive their previous plans. However, now the business is focused not on Western markets, but on the stock exchanges of Hong Kong and the UAE, Forbes reports.
Everything is clear with us – Telegram channel “Kommersant FM”.
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