New 90s: will investors be able to make money during the crisis

The reduction of the discount rate of the Central Bank was another sharp change in the financial rules of the game that took place in RUSSIA in a very short time. In a situation of extreme instability, some Russians have chosen the strategy of withdrawing funds from bank and brokerage accounts and keeping them “under the mattress”. However, such a path will inevitably lead to a strong depreciation of money, RBC Petersburg experts emphasized in previous publications of the series of opinions “What will happen to the money?”.

Whether the right moment has come to invest in financial instruments and whether determined investors will be able to make serious money, as happened during the crisis of the 1990s, RBC Petersburg's interlocutors from the investment and banking sectors told.

Margarita Borodatova, General DIRECTOR of MC "DOHOD":

“The population cannot get away from the loss of money, because inflation is growing not only in Russia, it is high all over the world. But I hope that we will not reach 700% inflation per year, as it was during the perestroika period. Plus, we can be glad that the Central Bank and the government were able to get away from the situation of active volatility in the currency market and kept the market from panic. However, some temporary measures, such as a ban on withdrawing money from foreign currency accounts, on free conversion and EXPORT of currency, have undermined investor confidence.

The government has already lifted a number of restrictions related to foreign exchange transactions, which allows us to hope for an improvement in investment activity and for investing money within the country, because the profitability in Russia is good.

Now is a good time to enter Russian stocks. It is clear that our assets are undervalued, and even if the domestic Russian market is seriously narrowed, we will still see growth after a while. Plus, it is now interesting to invest in startups, because there are a lot of programs, and the state will actively support the Russian manufacturer. There are a lot of preferences for IT specialists now.

“Now is a good time to enter Russian stocks. It is clear that our assets are undervalued.”

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There are three objective trends that can contribute to an increase in investment within the country. Firstly, many companies that worked here, but were registered in foreign jurisdictions, received dividends and placed them abroad - now they will not be able to do this, they will have to invest this money domestically. The second is the release of sufficiently large capitals of those who fell under sanctions , both corporate and personal. They will also invest in Russia. And the third trend is a potentially possible emission from the side of the Central Bank, because our money supply aggregator is much smaller than in many countries with a developed market economy.

If uncertainty persists and there are no guarantees from the state, especially in terms of import substitution, where there are now a lot of ideas and a lot of investment projects, then these trends may not be realized. Entrepreneurs want to, but are afraid to invest there, because they do not understand the horizons - if in six months imports again pour into Russia, our businessmen will have neither temporary, nor technological, nor financial chances to win this competition. And it is unlikely that anyone on the part of the state will give an answer that import substitution is for a long time, and we are ready to hedge your risks...

It seems that, in terms of business opportunities, the situation is very similar to the 1990s, and many will be able to make significant money, very profitable to invest their efforts and funds. But the conditions are radically different in terms of the degree of concentration of the state in the economy, the nature of the regulation, and the level of freedom of entrepreneurship. This difference does not allow us to count on the economic boom that occurred in the 1990s.

“This does not allow us to count on such an economic boom that occurred in the 1990s”

In order for us to start an investment surge and have economic growth, a very significant business freedom is needed. It is necessary to reduce administrative barriers and lower taxes. Without changing the business environment, it will not be possible to ensure the implementation of the growth scenarios that can be expected. Those solution packages that are offered to support business are not as voluminous and energetic as the current realities require.”

Denis Kolov, director of the territorial office of Rosbank in St. Petersburg:

“For what is happening now in the international interbank market, some people use the term worlddisorder - world disorder. This is what fundamentally distinguishes the current crisis from all previous ones - unpredictability on a global scale. Nevertheless, we see that any crises, including the last covid one, later provoked a rebound, but the question is in which sectors of the Russian economy it will be - in my opinion, this is not at all obvious yet.

“We see that any crises, including the last covid one, provoked a rebound later”

Therefore, if we talk about rubles, now deposits are preferable to investment instruments: seasonal deposit offers eliminate risk as much as possible in the short term of 3-6 months. The deposit allows you to wait for time and see what will happen. And in this period, the income will be higher than the inflation rate.”

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