Russian retail investors head for foreign stocks, fearing fall in the rouble

Retail investors in the Russian market boosted purchases of foreign stocks in the first half of 2020

  

MOSCOW- Retail investors in the Russian market boosted purchases of foreign stocks in the first half of 2020 to help hedge currency risk amid a 15% drop in the value of the rouble this year, a survey showed on Thursday.

According to the National Association of Stock Market Participants (NAUFOR), nearly 2 million people in the country joined the flock of market players this year, taking the number of private investors to 5.4 million as of mid-2020. Total investment by retail investors is now 4 trillion roubles ($54.5 billion).

The boom was spurred by central bank rate cuts reducing the appeal of bank deposits and the COVID-19 pandemic leaving people working from home and with time to spare.

NAUFOR, which represents Russia's brokerage community, said the share of foreign stocks in private investors' portfolios grew to 8.2% at the end of June 2020, up from 3.5% the year before.

"Private investors are the main driver of stock market development today," NAUFOR president Alexei Timofeev said at an online conference on Thursday.

"Interest is not waning, we are seeing that people entering the securities market are striving to diversify their portfolios and insure themselves against a fall in the rouble by investing more and more in instruments nominated in foreign currency - foreign stocks and Eurobonds."

However he added that Russian investors prefer domestic assets and that it was unlikely the share of foreign instruments in their portfolios would ever exceed that of Russian shares.

Russia's largest bourse, the Moscow Exchange, is expanding the list of foreign instruments it offers, with U.S. blue-chip shares due by the end of August. 

Its closest rival, the Saint Petersburg Exchange, which already offers a wider variety of foreign assets, said it would add a range of German stocks in August.

($1 = 73.3600 roubles)

(Reporting by Elena Fabrichnaya; writing by Alexander Marrow; editing by Philippa Fletcher) ((alexander.marrow@thomsonreuters.com; +7 495 775 1242;))

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