Stanislav weighs the year 2023 and identifies the key moves in the economy and the stock market that stood out.
Despite geopolitical headwinds, the year ahead shows resilience in both the economy and markets. Russia’s GDP growth is projected to surpass 3% by year-end, while macro conditions have shifted significantly: the policy rate more than doubled, moving from 7.5% to 16%, and the ruble weakened about 30% against the dollar.
When demand for stocks tightened due to tighter money policy, the ruble’s devaluation provided a springboard for equities, especially exporters, which dominate the Moscow Exchange index. The index has risen about 40% since January, with the oil and gas sector up more than 50% and the financial sector also showing notable outperformance.
The economy is streaking ahead, with many firms reporting solid financial and operational results. It is also important that company reports are again accessible to investors after a long period of secrecy. Information on top management’s compensation and forecasts helps investors make more informed and prudent trading decisions.
Many issuers have resumed dividend payments. Corporate governance is improving, transparency is rising, and the shift of Russian enterprises back to domestic operations continues, a process often described as relocation homeward.
— How did this year unfold for BCS?
“It was a challenging year in some respects, yet it also proved to be very active and productive. Hundreds of thousands of new clients joined, many immediately funding their brokerage accounts and starting to invest.
The rise in client activity required reliable market infrastructure, steady client services, and heightened team productivity. On balance, the firm managed these pressures effectively.
There are other encouraging trends. First, private investors have grown more confident and are becoming the market’s main drivers. They are selecting assets more thoughtfully and seeking professional guidance from financial advisors, personal brokers, and asset managers. The growth of more than 50% in the funds managed by the BCS group’s management company in 2023 is a clear sign of this shift.
Digitalization of the investment space continues, with mobile apps and personal accounts expanding. For instance, the BCS World of Investments app surpassed 1.5 million installations during the year.
— How tough is it to craft financial products in today’s environment? Which new vehicles are especially in demand?
“New solutions are created for investors despite volatility, limited access to foreign markets, and fluctuating sanctions histories. The depth of expertise, broad experience, and scale of BCS enable the delivery of effective and relevant options for a wide range of clients, from startups to high-net-worth individuals.
Specific examples include the launch of the BCS Capital mutual fund, the country’s first fund offering regular payments into a brokerage account. Additionally, more than 60 new automatic tracking strategies have appeared on fintarget.ru, allowing investors to automate steps that professionals would take.
The Market Leaders unit strategy, launched by BCS Hayat Sigorta, targets the most promising domestic securities selected by holding analysts. It provides legal protection and targeted fund transfers. In the first four months, this program delivered profits above 25%, nearly twice the pace of the Moscow Exchange index.
The market continues to evolve. It not only adapts but also builds toward new conditions, widening the range of tools available to clients for diversified savings.
— What do predictions suggest for investors next year?
The outlook remains positive for the Russian market. The Moscow Exchange index is expected to reach 4,000 points over the next 12 months, with a growth potential around 32% including dividends. The economy’s return to growth supports a favorable market revaluation, and risks appear manageable.
Dividend season is expected to begin in the second quarter, with an anticipated dividend yield near 11%. A sizable portion of dividends may be reinvested to further strengthen portfolios.
Interest rates are forecast to fall by the end of the second quarter next year, with estimates suggesting a rate around 10% by year-end. This outlook should support the stock market, while risks remain linked mainly to commodity prices.
— Which investment vehicles deserve attention as the year closes?
Overall, diversification stands as the guiding principle given current conditions. Russian stocks deserve emphasis, particularly for investors with a shorter time horizon.
The Moscow Exchange index’s correction toward the 3000–3300 point range presents an attractive backdrop for long-term investors. A variety of securities appear compelling; readers can explore the stocks with the strongest growth potential and the overall strategy for the coming year on the information and analytics site BCS Express.
Participation in new IPOs also looks promising. A recent survey shows strong investor interest in new placements, with about nine in ten planning to participate in future IPOs. Industry expectations point to 12–15 new players in the Russian market in 2024.
Exchange rate risk can be managed with substitute bonds, which protect against depreciation while keeping investments in rubles tied to the dollar exchange rate.
For those with a short horizon or who prefer to park funds for the New Year holidays, bank savings products offer potential. Market analysis can help identify favorable rates, and institutions like BCS Bank provide options to deposit and withdraw funds without losing accrued interest, which is calculated daily.
— To wrap up, what questions matter for VIP investors today?
Unsurprisingly, interest in individual trust management has grown. The advisory flow into the BCS platform has nearly doubled in under a year, reflecting demand for premium, highly customized strategies. Clients with substantial wealth gain regular access to their dedicated managers and tailored investment plans.
Most wealthy clients are qualified investors who also seek exposure to structured products. These bespoke decisions are crafted to align with a client’s preferred timing, conditions, and income flow. The goal is to build multi-currency portfolios with predictable results.
One example is the Currency Rally structured product, now in active demand among VIP clients. The underlying asset is the U.S. dollar-ruble exchange rate, enabling profits from both exchange rate moves and coupon payments.