St. Petersburg Exchange is studying geography – Newspaper Kommersant No. 235 (7436) dated 12/19/2022

According to market participants, SPB Exchange plans to expand the geographical offer of securities by issuers from friendly jurisdictions no earlier than the second half of 2023. Analysts consider India to be the most promising direction. They emphasize that in order to attract the interest of investors, “strong information support” and a solution to the remaining acute issue of the settlement currency of trading will be required. At the same time, a real variety of investment ideas may not arise, because most of the friendly markets are developing, which means they are similar to each other.

SPB Exchange will start trading in securities listed in Brazil, India, Mexico, Uzbekistan, South Africa and other developing countries no earlier than the second half of 2023, rather closer to its end, a Kommersant source in the financial market said. So far, according to him, the idea is “under discussion.”

Another Kommersant source in a large brokerage company believes that the infrastructure of Kazakhstan and the UAE will be used for access. At the same time, he called the use of national currencies optional – “bidding can be in dollars, and even in rubles at cross rates.” Roman Goryunov, head of the SPB Exchange, announced plans to launch trading in securities from these countries at the end of last week. The exchange declined to comment further.

Market participants expect shares of Indian companies Reliance Industries Ltd ($213 billion), Infosys ($78 billion), ICICI Bank ($75.2 billion), Tata group, Brazilian Vale SA ($76 billion) and Petrobras ($58 billion), gold mining South African companies (Sasol, Gold Fields, AngloGold, Sibanye).

At the same time, experts interviewed by Kommersant called the Indian market the most promising. And there are several reasons for this, says Artem Autlev, an analyst at Ingosstrakh Investments. Firstly, 1/6 of the world’s population lives in India, which opens up huge opportunities for the growth of consumption of goods. Secondly, significant GDP growth rates (by 6-8% per year over the past few years, not counting the pandemic period). Thirdly, soft monetary policy (the MSCI India index for 2021 grew by more than 30%, and since the beginning of 2022 – an increase of 3.5%, despite the global decline in world markets).

Experts named the Kazakhstani market as another real direction. According to Freedom Finance Global analyst Alem Bektemirov, there is a high probability that more than two or three Kazakhstani companies will place ordinary shares on the stock exchange (formerly known as the fintech bank Kaspi.kz and Kazatomprom), since the shares will be denominated in tenge, which does not mean sanctions risks, unlike securities that are quoted in dollars.

The expansion of the number of traded instruments will enable the Russian investor to reduce risks and diversify investments, says Yaroslav Kabakov, Strategy Director at Finam Investment Company. However, low liquidity and imperfect financial institutions in friendly countries create additional investment risks, he says.

In addition, all emerging markets, with the exception of Hong Kong, Taiwan and Singapore, are quite similar to each other, said Valery Yemelyanov, an expert on the stock market at BCS World of Investments. There, according to him, local banks and energy corporations dominate, and if there are mineral resources, then metallurgical holdings. “Thus, they are not much different from the Russian market – just different names, different currencies and a bit of local color,” he added.

However, retail investors know little about companies outside of Russia and the US. “For them, these brands are just white noise, so without strong information support it will not be possible to promote investors’ interest in distant exotics,” Mr. Yemelyanov believes. At the same time, the issue of the currency of calculation is quite acute, experts emphasize. Thus, the Kazakhstani tenge and the Hong Kong dollar (worth hundreds of millions of rubles a day) are relatively actively traded on the Moscow Exchange, deals with the Uzbek sum are made occasionally, and there were no deals at all with the South African rand. Therefore, according to Dmitry Alexandrov, Managing Director of Ivolga Capital Investment Company, it is possible that settlements on shares will take place not in local currencies, but in rubles or available foreign currencies.

Ksenia Kulikova