The share of individuals in stock trading on the Moscow Exchange returned to the spring of 2022
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According to the Moscow Exchange, the share of private investors in the volume of stock trading in 2023 averaged 79%, in the volume of bond trading – 32%. At the same time, in December 2023, the share of individuals in shares fell to 72%, the minimum since the spring of 2022. Experts believe that the interest of retail investors in the stock market has weakened as rates have risen and deposits have become more attractive. In the coming months, activity will directly depend on the actions of the Central Bank.
The Moscow Exchange has disclosed data on the participation of individuals in trading in 2023. Their share in the total trading volume in shares in 2023 averaged 79%, in bonds – 32%, in the spot currency market – 18%, in the derivatives market – 65%. At the same time, in December 2023, the share of individuals in stock trading fell to 72% (the minimum since the spring of 2022), and in bond trading it was 33%.
The press service of the Moscow Exchange explained that the market structure is “gradually normalizing.” “In 2023, transactions were concluded monthly by an average of more than 3 million people, but since September – about 1 million people daily,” they noted. “In the fourth quarter of 2023, the average daily trading volume on the stock market was about 100 billion rubles, more than doubling exceeding fourth quarter 2022 results.”
In the absence of growth in the stock market, private investors actively increased their investments in money market funds, which are not exposed to market risks and benefit from rising key rates. According to InvestFunds, in December 2023, the net inflow of funds into such funds amounted to almost 48 billion rubles, which is 2.5 billion rubles. higher than in November. Trading volumes with such funds are also growing. According to Kommersant’s estimates, based on exchange data, in December 2023, the total trading volume of shares of five such BPIFs amounted to almost 140 billion rubles, which is 30% higher than the November result and almost 17 times more than the values at the beginning of 2023.
In December 2023, the influx of individuals into the Russian market amounted to only 500 thousand, compared to 700 thousand in November and 1 million in October. The interest of retail investors in the stock market gradually weakened as rates and the attractiveness of deposits increased, explains Tsifra Broker analyst Natalia Pyryeva. The Moscow Exchange index showed almost continuous growth throughout 2023, and the most noticeable correction began at the end of November, which theoretically confirms the hypothesis that trading participants decided to take profits before the new year, the expert specified.
Individuals actively invested in money market instruments; as rates grew, this became more and more relevant, says Dmitry Alexandrov, managing director of Ivolga Capital. Throughout December 2023, the key rate was at 16%, and this attracted investment from individuals both in the money market and in floating rate bonds, he added. On the other hand, investors “have a strong feeling that each rate increase puts pressure on the operating and financial results of corporate issuers,” noted independent financial analyst Andrei Barkhota. During these periods, according to the expert, taking into account the cost of borrowing, equity financing for companies is preferable to debt.
At the end of the year, individuals traditionally become less active, preferring not to take risks, while institutional investors, on the contrary, fix positions and prepare portfolios for next year, notes Sergei Suverov, investment strategist at Arikapital. Institutional investors traditionally place all available liquidity in December in order to move into the next year “fully invested,” confirms portfolio manager of Trinfico Management Company Yuri Grossman.
In the coming months, the activity of institutional investors will directly depend on the actions of the Bank of Russia, Mr. Grossman believes. Since the next rate change is expected no earlier than the second quarter, “there is likely to be some decline in institutional activity relative to the level of the end of 2023,” the expert notes.
Ms. Pyryeva expects that in the medium term, activity in the stock market will gradually increase – the main driver of growth will be the annual reporting season in February-March, when issuers begin to announce final dividends. Growth, she adds, will be held back by continued high rates.
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