Issue price – Newspaper Kommersant No. 30 (7475) of 02/17/2023
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The question of a domestic investor is a key one for the preservation and development of the Russian financial market, which is deprived of the opportunity to rely on an external investor.
Today, the main investor in the Russian stock market is retail, with about 7 million clients of brokers and managers with assets of about 6–7 trillion rubles. This total volume is approximately equal to the industry of mutual investment funds (UIFs) and more than non-state pension funds (NPFs), and in terms of investing in Russian stocks it exceeds both of them combined.
Even at the end of 2021, the role of retail investors in the country’s organized stock market was equal to the role of foreign investors, and now exceeds 60% of turnover. But growth should not be misleading – the number of investors will begin to decline if the state does not make efforts to preserve them and, most importantly, maintain interest in the securities market. However, we observe either reverse or half measures.
We see the intention to abandon the main tax incentives that worked and were a condition for attracting a mass retail investor to the stock market. The cancellation of IIS-1 and IIS-2 is being discussed, but IIS-3, which will replace them in the form in which it is currently offered, will not be in demand and therefore, in essence, is not a replacement, but the abolition of tax incentives for retail investors in the stock market. market. Tax exemptions for bond coupons have already been removed, making deposits more profitable than investing in debt securities.
It is worth adding to the overall picture the intentions of the Bank of Russia to tighten the criteria for qualified investors, which means limiting the access of unqualified investors to financial instruments and limiting their leverage. And we can assume that the interest of retail investors in operations on the securities market will decrease. Who can support them?
The most important domestic institutional investor, which is lacking in the Russian stock market, seems to be NPFs. This industry invests 6% of pension savings and 10% of pension reserves in securities. But, if she invested from 40%, she could add at least 1.5 trillion rubles. on the stock market (which is quite a lot for a market with a capitalization of 37 trillion rubles and a liquidity of 18 trillion rubles a year) and to support the retail investor by stabilizing the market.
In the current approach to long-term investments, over the five-year period from 2017 to 2021, NPFs lost 10 percentage points (pp) to deposits in terms of profitability. They lost even more in terms of yield to bond mutual funds – 20 percentage points. At the same time, in terms of profitability, NPFs should take place between deposits and mixed mutual funds (which lost about 50 percentage points over five years).
That is why the NPF reform, which we are waiting for this year, will be so important for the stock market. It involves improving tax incentives to raise funds in NPFs. However, it is much more important to dismantle the obstacles to NPF investment in shares, namely, to abolish the requirements for the break-even of funds, which the industry reform does not yet envisage. In order for NPFs to expect higher returns, they need to be allowed more risk. Otherwise, even by stimulating the flow of funds to NPFs and expanding their investment declaration, we will not be able to rely on the funds’ investments in the stock market, they will remain a bond investor.
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