Forbes (USA): why Russian companies re-discover their own country

It is not that Russian companies are moving their offices in Russia. Most of their offices is in Russia, and most of their activities also takes place in Russia. But their shareholders — that is, people who invest their money in their business, it is basically the Americans and the British. These Russian companies listed on the new York stock exchange. In the automatic quotation of National Association of stock dealers (Nasdaq). On the London stock exchange. How about the Moscow stock exchange? Who are they? The empty space?

Now, when interest rates on savings are low, the Russians began to invest in the stock market. Several years after the construction of the glittering international financial centre in Moscow may finally came to that to hit the billions of rubles that were spent on steel and glass. And this was made possible largely due to the fact that Russian companies are now gradually converted the Russians to their shareholders. These Russian companies are also listed on the new York stock exchange. But they also offer their shares in Moscow — often in dollars, to attract more potential shareholders.

“The surge in sales and growth the degree of participation of domestic investors gives companies an additional reason to register on the Moscow exchange in the pursuit of additional liquidity and lower volatility,” said Alina Sychev, head of Department of the markets of debt and equity, managing Director at Sova Capital.

The share of retail investors is growing rapidly. Now they account for about 40% of the total volume of trading transactions involving shares of companies listed on the Moscow exchange.

Registration on the Moscow exchange required for the company included in the MSCI Russia index. This in turn provides the Russian companies included in MSCI Russia, growth of portfolio investment.

Some Russian companies still consider the registration to foreign exchanges from the point of view of standards of a specific industry — for example, registration in the system of automatic quotation National Association of stock dealers (Nasdaq) is an obligatory step for those technology companies that rely on “indicators, comparable shares of American technology companies”. Moscow-based company of online recruitment Headhunter in the past year was registered in the Nasdaq.

Moscow exchange, apparently, has confirmed its status as a serious contender — if not as leader, but certainly as a reliable reserve.
If you’re a Russian company, decided to release their shares today, you will not have to place them in new York and London. You place them in Moscow. Did you discover Russian an individual investor.

This will be a valuable addition to the trading volume.

“Secondary listing on the Moscow stock exchange was a powerful driver of liquidity,” said nery Toledo (Neri Tollardo), head of relations with international investors in Tinkoff Bank. According to him, the average daily trading volume “has increased by almost three times,” and “it has allowed us to benefit from the rapid growth of the Russian market of individual investments. Approximately 50% of our average daily trading volume now is in Moscow”.

Tinkoff Bank were registered on the Moscow exchange in October. From the beginning until today, their shares rose by 30.4%.

In the 1990-ies, when the Soviet Union collapsed and the Russians tried to join the financial capitalism, several Russian companies such as Mobile TeleSystems and major mining company “Mechel”, registered on the new York stock exchange. Everyone wanted to go there because Russia was nothing like that. Russian companies simply had no choice.

After the entry into force of the new rules and requirements — in particular, Sarbanes-Oxley is to list shares on the new York stock exchange has become more problematic and expensive because the companies needed to fulfill the bulk requirements of the Commission on securities and stock exchanges of the USA. London stock exchange turned out to be a cheaper alternative to the new York stock exchange.

In 2000-ies Russia continued to build up its securities market, trying to recover from “cowboy capitalism”, which reached its peak in 1990-ies after the collapse of the Soviet Union.
When in 2013 did the Russian trading system and Moscow interbank currency exchange, the Russian stock market has moved to a new stage in the process of modernization, and the company knew the rules of the London and new York stock exchanges, took note.

Russian banks such as “Tinkoff Bank” and the largest Russian “Sberbank”, trying to arouse the interest of the masses and to convince the Russians to become shareholders of Russian companies.

Another reason for this is that liquidity in London is gradually decreasing.

At the peak in January 2012 on the London stock exchange were placed shares of 37 Russian companies, and by June 2020, the left 24, and, according to statistics from the LSE Group, since the return on the stock market of the Russian gold mining company “Polyus” in June 2017 no other Russian company has not deployed its shares.

In July the London stock exchange will leave and the Russian energy company TNK. According to its CEO Igor Korytko, he no longer considers the placement of shares on the London stock exchange the company’s priority.

Some foreign investors might also have to pay attention to Russia for the last four years, when this country has turned into a political punching bag — she was accused of all sins, from Brexia until the election of Donald trump in 2016.

On the Moscow stock exchange “returned” the 12 companies, not including EN+ group, the shares of which some time was available on two exchanges, after which she left only on the Moscow exchange.
The first company, “returning home,” was the Russian Qiwi payment service, which are registered on the Moscow exchange in October 2013. Later his example was followed by X5 Retail Group, “Polymetal” and “Yandex”. They have taken this decision to boost liquidity in Russia.
According to data from the Moscow exchange for the first half of 2020 individual investors have invested 220 billion rubles ($2.8 billion) in Russian stocks. This is 56 times more than in 2019.

“Our check on the local stock exchange was an important milestone in our history as a public company, and it has enabled millions of Russians to become our shareholders, said CEO Group Boris Dobrodeyev. — We continue to create technologies that will enhance shareholder value, and we believe that the listing will enhance the overall liquidity of our company.”

Recently, the company Headhunter has stated that she is also getting ready to make this step. The company has already received approval for secondary listing of American Depositary receipts on the Moscow exchange.

Such return of companies in Russia is primarily due to the strong interest from Russian individual investors.

According to the Moscow exchange in 2014 appeared on the market 72 thousands of new private clients — a pretty decent number for the country, accustomed to cash deposits and bonds of the Russian government. In 2019 the number of private investors grew by almost 2 million, and for the first half of 2020 at the Moscow stock exchange appeared 1.5 million newcomers on the Russian securities market.