The difficult choice of a private investor

The outgoing 2021 brought a lot of hopes and worries to private investors in Russia. On the one hand, the situation in all segments of the domestic market has developed positively for most of the time.

On the other hand, only a few events in the fourth quarter recalled specific risks. And prompted to resort again to the search for alternative options. Where to look for reliable and profitable investments in modern realities?

In search of profitability

It is true that 2021 has been a very successful year for global stock investors. The US S&P 500 stock index, for example, is up a quarter from the end of last year. And this is far from the limit. Electric Vehicle Manufacturer Promotions Tesla it increased approximately 1.5 times at the end of 2020. As for the values ​​of the calculation base of the S&P 500 index, the shares of the manufacturer of the Covid-19 vaccine were the ones that added the most in price. Modern (almost triple) and technology company NVIDIA (more than double).

It’s no wonder private equity ETFs around the world have hit record highs. By mid-November, they had already surpassed $1 trillion, according to Morningstar, an analysis company. For comparison, for all of 2020, these investments amounted to $757 billion.

But Russia turned out to be an exception in this “yield party”. Ruble National Stock Index Moscow Stock Exchange in mid-December, it grew by only 10.5%, the dollar index real time strategy showed a similar increase. The fault was a deep correction, which began under the influence of geopolitical factors. And as a result, the Russian stock market, having lost about 25% of its summer highs, formally entered a bear trend.

Of course, you can also find lucky stocks on national stock exchanges. Of the blue chips, he feels confidentgazprom”: its shares grew 1.5 times due to record prices in the gas market. powerfully fired TCS Group, whose shares rose 2.5 times. Riding the wave of Russia’s paper construction boom GC “Airplane” more than 5 times more expensive.

However, for index investing, which experts recommend to newcomers to the market, the year was not entirely successful, and its end recalled the purely Russian risks associated with geopolitics. This is one of the reasons why two-thirds of the brokerage accounts opened by Russians are empty (no money, no assets), and another 20% have less than ₽10,000 in assets.

Looking for reliability

In the context of high volatility in domestic equities, it would seem that fixed income instruments should satisfy a conservative investor. Furthermore, the cycle of rising interest rates that began in Russia promised an increase in yields on government and corporate bonds, as well as bank deposits.

Since the beginning of the year, the key rate of the Bank of Russia, having experienced six consecutive increases, has returned to the level of the beginning of 2018. In order to prevent the acceleration of inflation, the management of the Central Bank spared no effort. Even though the main pro-inflationary factors, such as global disruptions in the supply chains of international supplies of goods or rising labor costs due to lockdowns, fall outside its purview.

However, 2021 turned out to be one of the worst years ever for the Russian bond market. Index Growth C Bonds IFX it was just over 0.6% in mid-December, and this is the third lowest mark after 2008 (-7.1%) and 2014 (0.1%) years.

In addition to sharply raised inflation expectations – forecasts say consumer price growth could hit double-digit annualized rates in the coming months – Russian risks have re-emerged. First of all, it is geopolitics that has already taken a hit: in November and December, fears intensified that the US and the EU could impose new sanctions on Russian public debt. And secondly, an unpleasant story with attempts Rosnano agree with creditors to restructure debts, after which the Moscow Stock Exchange, following instructions from the Central Bank, suspended trading in all bond issues of the Russian state company for several days in November. By December, passions had calmed down, but “the sediment remained.”

Bank deposits also did not become an attractive instrument. Although throughout the year the reference rate increased from 4.25% to 7.5% per year, that is, by more than 3 pp, the weighted average interest on deposits increased only 1 pp to 5.5% per year . With more than 8% inflation, its returns remain deeply negative.

It’s more, from 2021 interest income on deposits in banks are subject to personal income tax at the rate of 13% (the tax itself will have to be paid in 2022). As a result, funds from individuals in bank deposits grew less than 0.5% during the year, to ₽32.85 trillion, and in real terms, their volume even decreased.

looking for an alternative

It is not surprising that, in the context of the problems with traditional instruments, investors start looking for alternatives. The bravest continued to dominate cryptocurrencies. quotes per year bitcoin increased from $29,500 to $48,500. However, to invest in this asset, you need nerves of steel and a lot of luck.

During the year, their quotes soared above the $60,000 mark and then fell to the initial $30,000 line. Of the “altcoins”, it was interesting doecoin Because of Elon Musk’s tweets. Its exchange rate multiplied by 40 in the year, however, the largest increase occurred in the first quarter. Shoot even harder Solarium For one more year 9 900%!

Precious metals did not like Investors: Gold in Russia is down 5% and silver down 15% since the beginning of the year. But real estate, contrary to gloomy forecasts, rose in Russian cities between 15% and 40%. In Moscow, the price per square meter has risen more than 15% in one year and 33% in two years. However, due to the rapid collapse of low-cost flats and apartments, as well as the reduction of prime mortgage programs, the minimum entry threshold for this market has almost tripled.

The outlook for 2022 is very bleak. The evolution of the Covid-19 pandemic, the speed with which central banks are withdrawing monetary stimulus and the continued growth of China, where significant problems are brewing in the construction sector, are factors of uncertainty. In addition, all the same “geopolitical risks” for Russia, which are generally not amenable to any forecast.

However, according to most experts, the global, and therefore the Russian stock market is waiting for a deep correction, precious metals may rise in price, if the US Federal Reserve does not move quickly to tighten monetary policy, and The well-known pattern “a bad year is followed by a good one” can work in favor of bonds.

Real-estate marketlikely to stall due to the increase in the cost of mortgages, while, interestingly, bank deposits have a chance to regain attractiveness for conservative investors. However, as one of the influential Western analysts wrote in the review, “Santa’s best gift this year is not a traditional rally, but a great certainty.”