Russia bans purchases of foreign stocks as investors eye China

Russia’s central bank has proposed banning domestic investors with less than $550,000 from buying foreign stocks as Western sanctions have prompted investor outflows, mostly to Chinese, Hong Kong and Gulf stock markets .

Moscow has seen a boom in retail investment since the Covid-19 pandemic, and Filip Gabunia, vice president of the Central Bank of Russia, said more than 5 million citizens held shares in foreign companies with a market value of 320 billion rubles ($5.85 billion).

The boom was fueled by a record number of domestic stock IPOs and low deposit rates. Many Russians also bought foreign stocks using accounts now frozen since Moscow invaded Ukraine in February.

Russia’s second-largest stock exchange, SPB Exchange, which specializes in foreign stocks, said in May that up to 14% of US-listed stocks held by its clients would have to be transferred to a non-trading account, due to restrictions imposed by the Brussels depository Euroclear. .

Last month, SPB Exchange said investors could buy securities of Hong Kong-listed companies on the St. Petersburg Stock Exchange’s own platform.

St. Petersburg offers Hong Kong shares

On June 20, SPB Exchange began trading 12 securities whose main listing is on the Hong Kong Stock Exchange and will provide access to an exchange infrastructure allowing brokers to carry out trial trades.

“This gives brokers the ability to set up, on a working stock market, their accounting systems for trading in a new currency, the Hong Kong dollar,” SPB spokeswoman Julia Kuznetsova told Asia Financial.

“As the market grows, plans are in place to gradually expand the list of Hong Kong-based titles, reaching 200 by the end of 2022 and 1,000 at some point in 2023,” said she declared.

At a press conference in Moscow on Thursday, the central bank said the ban on assets below $550,000 was intended to protect retail investors from potential problems with frozen access to capital.

However, some analysts have said that there are many indications that there is a will to stop the outflow of currency from the country.

“Following restrictions on Russian investors in Canada, the United States, the United Kingdom and the European Union, trade has shifted to stock exchanges in Hong Kong, Beijing and the Middle East,” he said. said the Polish New Economy media site. Wirtualny Nowy Przemysł Noted.

  • George Russell, with Reuters

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george russell

George Russell is a Hong Kong-based freelance writer and editor who has lived in Asia since 1996. His work has appeared in the Financial Times, Wall Street Journal, Bloomberg, New York Post, Variety, Forbes, and South China Morning Post. . .