Russian stocks are at a level last seen before the invasion of Ukraine, with retail investors driving a market cut off from foreigners.
(Bloomberg) — Russian stocks are at a level last seen before the invasion of Ukraine, with retail investors driving a market cut off from foreigners.
Since international sanctions and local restrictions curbed options for sending money abroad, more Russians are opening retail accounts to park their cash in local equities. A weakening ruble is also encouraging them to buy the stock of some of the nation’s biggest commodity exporters, which continue to earn foreign-currency revenue.
On Tuesday, the ruble-denominated Moex Russia Index closed at 3,093.64, above its level before the invasion of Ukraine on Feb. 24, 2022.
“Instead of large non-residents, who move the market, a mass of local investors is coming,” said Vladmir Bragin, a strategist at Alfa-Capital Management Co. The Russian stock investor “has nowhere to run,” making panic selling less likely, he said.
The number of individuals with brokerage accounts on the Moscow Exchange rose to almost 26 million in June 2023, an increase of 13% compared with the end of last year, according to data from the bourse.
On Monday, retail stock traders had their busiest day in 2023, with 1.3 million private individuals active, more than double the average for last year, the exchange said. Individuals accounted for more than 80% of trading on the day, it said.
To be sure, the Moex gauge has a lot further to go before reaching previous peaks. And Russia’s dollar-denominated equity benchmark still trades more than 10% below its pre-war levels.
“It’s not a functioning market,” said Kamil Dimmich, partner at North of South Capital, a London-based emerging-market equity manager. “If I had to guess the outlook, I’d say the market will continue rallying because domestic investors have nowhere to put their savings.”
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