Factors influencing individual investment on the Russian stock market

Alexandra Vlasenkova, University of Pennsylvania

Abstract

CBR also lowered key rates to decrease the spread between the inflation expectations and the real rate. Currently Russian economy is experiencing a historical maximum of the individual investment on the Russian stock market. In this paper we used linear correlation method to see the intensity of the association between economic factors such as market interest rates and profitability of different types of assets and indicators of individual investment activity like number of active broker clients, number of unique active investors in Moscow Stock Exchange and the increase in the amounts in asset management. We also used the horizontal analysis helps to compare historical data such as assets that people invested in over a number of periods. In this paper, it is used to show which types of assets were the most attractive to individuals since 2018 to 2021. We found strong correlations between percentage of active broker clients and key rate adjusted for inflation (-0.91), percentage of active broker clients and real and nominal interest rates on the bank deposits of the 10 largest banks of Russia (-0.84 and -0.89 respectively), absolute value of asset growth of individuals in asset management to key rate and key rate adjusted for inflation (-0.94 and -0.93 respectively), absolute value of asset growth of individuals to real and nominal interest rate of bank deposits in 10 largest banks of Russia (-0.94 and -0.84 respectively), percentage of active broker clients and the amounts of individual investment in bonds (0.92), percentage of active broker clients and complains on the professional market participants (0.87), net purchase of transactions of individuals and yield of government and corporate bonds (-0.81 and -0.9 respectively). Those correlations showed that lower market rates made individuals seek higher returns in riskier assets and pushed them out of the bank deposits to the stock market. This increased investment demand made new investment instruments popular and brought changes to the market infrastructure.

 

Date Posted: 27 January 2022