Moscow exchange allowed foreigners to trade: what does this mean for the Russian market

Yekaterina Maksimova

The Central Bank's decision to return non-residents from friendly countries to the stock market frightened stock market experts. They did not rule out that residents of unfriendly jurisdictions, who are not allowed to trade, will begin to perform any actions with the securities of Russian companies (purchase / sale) through “friends of Russia”. At the same time, non-residents from all over the world own Russian shares worth more than 152 billion rubles.

“One can foresee how large institutional investors from the US or the EU would behave. The only possible step for such investors is to press the “sell on the market” button and try to save at least something”, - the authors of the Nebrekhnya telegram channel suggested. In this case, the shares of Russian joint-stock companies would depreciate exponentially, turning into pieces of paper with zero value. Or would have ended up in hedge funds. Or worse, to the "vulture" funds , which buy distressed assets for a penny.

Alexander Razuvayev, a member of the Supervisory Board of the Guild of Financial Analysts and Risk Managers, also did not rule out that hypothetically, some foreign shareholders who have taken a course on curtailing business in Russia could thus withdraw from joint projects with Russian shareholders.

Investment banker Yevgeny Kogan also noted that there are fears that major strategists working in projects important for the country may (and most likely have already begun) sell their stakes to organizations and companies that “are capable of creating serious problems for working in Russia on projects , strategic for the Russian economy and the economic security of the country in general”.

And historically, high shares of non-residents are present in the shares of such largest companies as Gazprom, Sberbank, Yandex, Polymetal, MTS, etc.

“All-clear alarm” sounded on Friday, August 5th. President Vladimir Putin signed a decree on a complete ban until the end of this year of any transactions with shares of foreigners from unfriendly countries in Russian strategic banking and fuel and energy enterprises, including users of large Russian subsoil plots (hydrocarbons, metals, minerals, diamonds, gold, platinum, lithium) .

After the presidential decree, the Moscow Exchange abruptly changed plans and announced that on Monday, August 8, it would open admission to non-residents from unfriendly countries, but only on the derivatives market. Even “friendly” foreigners will not be able to trade on the stock section yet. The Moscow Exchange issued a press release and explained the delay by the need to “adjust the system” of trading.

Andrey Tsuran, director of the BCS Mir Investments branch in Yekaterinburg , explained what this means: from now on, non-residents from friendly countries can only buy and sell options and futures, respectively, for both shares and bonds, access is still closed for them.

In his opinion, today's events are the most fraught with, it is only volatility in the stock market. “How strong it will be is not yet clear. Let's wait for the results of the day,” summed up Andrei Turcan. He also noted that buying / selling futures is more of a speculative topic, and stock market players earn on stock price changes, but do not receive securities themselves.

The authors of the Spydell_Finance telegram channel also believe that today the Moscow Exchange will not bring any changes. “So far, there was a misfire and on August 8 they opened access only to the derivatives market, which, due to the specifics of the market, means that they have no access to assets at all, since the number of open positions in the derivatives market among unfriendly countries is equal / close to zero, and derivatives imply risk hedging mechanisms, but not access to assets and property rights,” Spydell_Finance clarifies. At the same time, the authors of the channel do not exclude that the admission of non-residents to full-fledged trading is a matter of time.

Alexander Razuvaev noted that against the backdrop of changes, the start of the day on the stock exchange began with growth. The Moscow Exchange Index in the first minutes of trading rose by 2.17% to 2098.94 points, the RTS index rose by 1.37% to 1087 points. The leading papers of IT companies are VK (+6.04%), Yandex (+5.48%), Ozon (+4.13%), shares of Gazprom, PJSC Aeroflot and others also show growth.

Recall that at the end of February, the Central Bank imposed a temporary ban on the sale of securities of Russian companies on behalf of non-residents for brokers. According to the regulator, at the end of 2021, the volume of funds of non-residents in Russian shares was about 50%.

Finam experts note that after the blocking of such a significant amount of funds, the structure of participants in the trading of the Moscow Exchange has changed significantly. The volume of transactions passed into the hands of individuals - their share in trading in shares, according to the exchange, for example, in July amounted to 77%. Trading volumes decreased several times. According to the results of July, the average daily volume of trading in shares amounted to 36.6 billion rubles. For comparison, in July 2021, trading volume exceeded 90 billion per day.