— Stanislav, it’s time to summarize the results of 2023. What important trends in the economy and stock market can you identify?
— Despite the difficult geopolitics, the coming year can be considered generally successful in terms of the economy and the stock market. Russia’s GDP growth by the end of the year could exceed 3%. At the same time, macroeconomic conditions have changed noticeably: the key rate has more than doubled – from 7.5% to 16%, and the ruble has weakened against the dollar by 30%.
If a tight monetary policy restricted the demand for shares, then the devaluation of the ruble became fertile ground for their rise, and above all for the securities of exporters, more than half of which are in the Moscow Stock Exchange index. The index has gained 40% since January, and the oil and gas industry index has gained more than 50%. Shares of the financial sector also looked noticeably better than the market.
The economy is booming, with many companies reporting strong financial and operational results. It is also important that the reports are made available to investors again after almost a year and a half of confidentiality. Information about senior management’s financial condition and forecasts allows investors to make more informed and reasonable trading decisions.
Many issuers have returned to paying dividends. The market is improving in terms of corporate governance, transparency is increasing, and the relocation, in other words, “relocation” of Russian enterprises to their homeland continues.
— How has this year been for BCS?
“It was a difficult year in its own right, but it was also a very active and productive year. Hundreds of thousands of new clients have come to us, and many of them immediately deposit money into their brokerage account and start investing.
The increase in customer flow and trading activities requires maintaining the reliable stability of our infrastructure, the stable operation of customer services and, of course, the increased productivity of our entire team. In my opinion, we coped well with all the challenges last year.
We’re also pleased with the other trends we’re seeing. First of all, the awareness of private investors, who have become the main driving force of the market, is increasing. People are increasingly approaching the choice of assets more qualitatively and comprehensively, relying not only on their knowledge and experience, but also on the advice of professionals (financial advisors, personal brokers, asset managers). The growth of more than 50% in the volume of client funds managed by the management company of the BCS group in 2023 is a clear confirmation of this.
Of course, the trend towards digitalization of the investment business continues, mobile applications and personal accounts are being developed. For example, the BCS World of Investments application was installed more than 1.5 million times by users during the year.
— How difficult is it to create financial products in the current environment? Which new vehicles are particularly in demand?
— We create new solutions for investors despite turbulence, limited access to foreign markets and unpredictable sanctions history. The depth of expertise, the broad experience of our experts and the scale of BCS’s activities allow us to create and deliver effective and relevant solutions to meet the needs of a wide range of clients, from startups to wealthy investors.
I will give specific solution examples. This year, we launched the BCS Capital mutual fund, the first mutual fund in the country where it is possible to receive regular payments into a brokerage account. In addition, more than 60 new automatic tracking strategies have appeared on our site fintarget.ru, allowing you to automatically repeat the steps of a professional.
I would especially like to point out the “Market Leaders” unit strategy that BCS Hayat Sigorta initiated in the market. These are investments in the most promising domestic securities selected by the analysts of our holding. There are also additional benefits such as legal protection and targeted fund transfer. In the first four months after launch, the profitability of the program was over 25%; This is almost twice as high as the growth of the Moscow Stock Exchange index over the same period.
The market is evolving; it now not only adapts but also evolves to new conditions. And the more tools appear, the wider the opportunities for our customers to diversify their savings.
— According to your predictions, what awaits investors next year?
— We maintain our positive view on the Russian market; The Moscow Stock Exchange index is expected to reach 4,000 points in the 12-month horizon. Growth potential – 32% including dividends. While the Russian economy’s transition to growth has become a factor in the positive revaluation of the market, the risks seem to be quite controlled.
Additionally, the dividend season will start in the second quarter and the dividend yield is expected to be 11%. A significant portion of dividends can be reinvested in the market.
We expect interest rates to be reduced as of the end of the second quarter of next year. And at the end of this, according to our analysts’ estimates, the rate may reach 10%. This should also support the Russian stock market. When we evaluate market risks, they are mainly in the commodity prices plane.
— Which vehicles would you recommend paying attention to on New Year’s Eve?
— In general, in the current situation, we can recommend adhering to the principle of maximum diversification of assets as much as possible. It makes sense to focus on Russian stocks, especially if you have a short investment horizon.
The current situation in the market, where the Moscow Stock Exchange index is correcting towards the lower limit of the 3000-3300 point range, is extremely attractive for long-term investors. Many securities look interesting right now; You can learn about the stocks with the greatest growth potential and the overall investment strategy for the entire next year. To read on our information and analytics website “BCS Express”.
Participation in new IPOs is also interesting. A recent study we conducted revealed that investors are showing great interest in new placements. 9 out of 10 respondents plan to participate in future IPOs. There may be 12-15 new players on the Russian stock market in 2024.
Exchange rate risks can be reduced with substitute bonds. These securities allow you to save on depreciation and invest in rubles pegged to the dollar exchange rate.
If you have a short horizon or want to “sit” on some means through the New Year holidays, bank savings products can be useful. Now you can analyze the market and find an option with good rates. BCS Bank definitely has such solutions. You can deposit and withdraw funds without losing interest – they are accrued on the daily amount in the account.
— In conclusion, let’s talk about rich investors. What are the most pressing questions about investments among VIP clients today?
— For obvious reasons, their interest in individual trust management has increased. As part of our advisory service, the flow of assets into BCS is one of the strongest; It has almost doubled in less than a year! This is a premium service that is maximally customized for a specific wealthy client. A special investment strategy is developed for him. Here too, it is important that a large-capital investor has the opportunity to communicate regularly with his manager.
At least 90% of wealthy clients are qualified investors. In addition to consultancy, they also attract attention in terms of structured products. These are investment decisions made individually according to the investor’s wishes, answering the questions of when, under what conditions and in what amount the income payments will be made. We help build portfolios in different currencies and with predictable results.
For example, the structured product “Currency Rally” with coupon guarantee is now in active demand among VIP customers. The underlying asset here is not securities, but the US dollar-ruble exchange rate. In other words, there is the opportunity to earn money from both exchange rate changes and coupon payments.