In July, individuals significantly reduced their investment activity

After months of heavy investment in Russian equities, by mid-summer, private investors slowed down. The volume of net purchases fell to a minimum since the beginning of the year. The alternative was the foreign exchange market. In part, the departed players were replaced by institutional investors who increased investments. At the same time, the main net sellers were non-residents from friendly countries, systematically reducing investments in Russian assets.

In July, individuals significantly reduced their investment activity. As follows from the review of financial market risks by the Bank of Russia, last month net purchases (the difference between buying and selling) of shares by private investors amounted to only 2.9 billion rubles.

In the previous four months, their net purchases amounted to 13-29 billion rubles. per month. At the same time, individuals are the main participants in exchange trading in shares – according to the Central Bank, their share remains above 80% of the total volume of transactions.

In general, according to the Moscow Exchange, the number of unique investors in July reached 26.39 million people, and the number of active investors (made at least one transaction) amounted to 3.06 million people.

Purchases from individuals decreased due to overheating of the market, this is due to the fact that against the backdrop of the collapse of the ruble, part of the funds was transferred by them to the foreign exchange market, says Sergey Suverov, a strategist at Arikacapital. In addition, the expert notes, geopolitical risks are still high, there are problems with the disclosure of information by issuers and the payment of dividends.

The current situation is due to several fundamental factors: growing threats of ruble devaluation, an increase in the key rate of the Bank of Russia (up to 8.5% per annum, see Kommersant on July 21), as well as the persistence of the state budget deficit amid the suspension of the so-called grain deal, says an independent financial analyst Andrei Barkhota. This, according to him, caused a local decrease in the propensity to invest on the part of individuals seeking to shift into money market instruments.

The position of the main net buyers was taken over by non-credit financial institutions (NFOs) — net purchases amounted to 9.3 billion rubles, while in previous periods they were mainly net sellers.

The main net sellers on the stock market were non-residents from friendly countries (non-residents from unfriendly countries do not have the opportunity to trade on the Russian market). In July, net sales amounted to 10.4 billion rubles, a record high for a year and a half. At the same time, friendly non-residents regularly acted as net sellers of Russian shares, but the volumes were noticeably lower.

The closure of some positions by investors from friendly countries has become “to some extent a model of behavior for Russian investors,” many of whom have changed their registration to mitigate sanctions risks, Mr. Barkhota believes. If we talk about jurisdictions, then such countries as Armenia, Georgia, Kazakhstan account for a large share. “The share of operations by friendly residents on the stock market in July-August 2023 will be at least 15%,” the expert adds.

However, after the rapid growth in July, when the Moscow Exchange index added almost 10%, breaking 3 thousand points and gaining a foothold above the values ​​of the end of February 2022, it has clearly slowed down in recent days. “Local highs have already been reached, and a correction is ripe,” says Mr. Bolotskikh.

However, market participants are optimistic. The growth of the index was due to the idea of ​​a significant growth potential for the securities of most Russian issuers, Mr. Barkhota believes. According to him, before October 1, the index may return to the level of 3150 points, and by the end of the year – to 3200 points.

Ksenia Kulikova