Russian Financial Market: Securities to Play More Significant Role for Households

The aggregate amount invested by Russian households in various financial instruments (outside deposits) almost doubled last year and reached R6 trln as of the end of 2020. The total number of brokerage accounts has already exceeded 10 mln units, but further rapid growth of this indicator is less likely, given the already high penetration of the service. At the same time, the relocation of money from banking accounts into financial instruments may continue in 2021, if interest rates remain low. This shift creates additional risks for private individuals, some technical difficulties for domestic commercial banks, but has almost neutral macroeconomic impact.

--- GKEM Analytica expects that the total amount of investments by Russian households may increase by R2 trln in 2021 to R8 trln.

--- On the back of contraction of interest rates, the share of cash on the current accounts of households in banks increased from 23-25% at the end of 2019 to 33% one year later. Some part of this money may be ready for transition to financial market.

--- Around 7% of Russians have opened brokerage accounts, but about 70% of them are “empty.”

--- Two local exchanges were actively promoting access to international equity market. As a result, the exposure of Russian households to these assets increased fivefold in 2020 to almost R700 bln. 

--- The investment activity of households added at least $9.8 bln to capital outflow in 2020, which represents about 20% of the aggregate amount. From the macroeconomic point of view, this contribution was not critical and was compensated by other items (such as absence of tourism abroad).

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