The volume of assets of foreign clients in Russian brokerage accounts increased by 20% in the third quarter

The volume of assets of foreign clients in brokerage accounts of Russian investment companies and banks in the third quarter increased by almost 20%, to 1.3 trillion rubles. The pace decreased slightly compared to the second quarter due to a slowdown in the growth of assets of companies reregistering from abroad to Russian offshore companies. But clients from foreign offshores (UAE, Belize, Seychelles, Cayman Islands, Luxembourg) continued to increase their assets, and the highest rates were observed for Saudi Arabia, which is relatively new to the list. This country, experts explain, against the backdrop of expanding economic and political ties with the Russian Federation, is increasingly being seen as an alternative to the UAE.

According to Kommersant’s estimates, based on data from the Central Bank, in the third quarter the total number of non-resident accounts with Russian brokers increased by more than 6%, to 27.5 thousand. Account assets grew even faster. During the quarter they increased by 19%, to 1.26 trillion rubles. The main increase in accounts was provided by private investors (by almost 1.4 thousand units, to 26.1 thousand units), and in terms of assets – by legal entities (by 24%, to 1.26 trillion rubles).

The growth rate of assets in the third quarter was slightly lower than in the second (23%). This is largely due to the slowdown in performance of clients located in Russian offshore companies. If in the second quarter their assets increased more than 13 times (by 123 billion rubles), then in the third quarter the growth was about 40% (by 52 billion rubles). The total assets of these clients occupy second place (RUB 185 billion) after investors registered in Cyprus (RUB 528 billion).

At the same time, after a lull in the second quarter (see Kommersant on September 18), the assets of clients from foreign offshore zones returned to growth. In particular, the assets of investors from the UAE grew 1.5 times, exceeding RUB 135 billion. The number of clients themselves was just over a hundred. The assets of investors (the majority are legal entities) from Seychelles and Luxembourg showed an almost two-fold increase, and by tens of percent – from Belize and the Cayman Islands.

“The influx of capital into Russian brokerage accounts from the UAE and other “friendly” countries is due to the fact that Russian investors open legal entities in these jurisdictions and continue to invest in Russian assets, including for tax reasons,” notes Kommersant’s interlocutor on stock market.

The largest increase in assets (in percentage terms) was observed from clients registered in Saudi Arabia. In previous periods, their assets were insignificant (less than 25 million rubles), but at the end of the third quarter they soared to 13 billion rubles.

As Maria Agranovskaya, managing partner of the Grad Bar Association, notes, Saudi Arabia, like Bahrain, is becoming an alternative to the UAE for many Russians who have moved and worked in this region. “Payments through the UAE from Russian banks are extremely difficult, and not everyone likes doing business from there,” explains Ms. Agranovskaya.

Investment strategist at Arikapital Management Company Sergei Suverov adds that, recently, free economic zones have been operating in Saudi Arabia, as well as in the UAE, which allows Russians to receive tax benefits. In addition, notes the General Director of TKB Investment Partners Dmitry Timofeev, “the Saudis remain friendly to us, which is confirmed by frequent contacts at the highest level.”

The geography of countries that are sources of investment capital largely repeats the list of countries with which the Russian Federation is actively establishing economic and political cooperation as part of economic reorientation and import substitution. In the current conditions, market participants expect further re-registration of companies and assets in “friendly” jurisdictions.

According to a Kommersant source in the financial market, we should expect that the map of capital inflows will continue to develop depending on the dynamics of economic relations with individual “friendly” jurisdictions. Ms. Agranovskaya believes that the assets of clients from Hong Kong and Mauritius can grow: “The main thing that now determines the popularity of a particular offshore or jurisdiction is the ability to work with Russian beneficiaries.”

Vitaly Gaidaev