How the stock market will be developed in Russia. Answers to the main questions

The stock market has significant prospects, the Central Bank and the Ministry of Finance of Russia said. And even though the key rate is currently putting pressure on it, this effect will weaken over time. The answers to the main questions about why exactly the authorities plan to develop the stock market and how they will do it are in the Izvestia material.

How did the authorities set their goals?

• By the end of 2023, the stock market capitalization exceeded 58 trillion rubles (about 30% of GDP). In the coming years, the government's most important task is to increase confidence in the entire stock market. The Cabinet of Ministers is striving to bring its capitalization to about 60% of GDP. One of the incentives is for large companies, including state—owned enterprises, to enter the stock exchange. At the same time, the Russian market should remain open to foreign investors. In particular, by 2030 it is planned to attract about 1 trillion rubles of external investments.

• The domestic stock market has significant potential. Currently, the high key rate has an impact on its dynamics, but this factor is temporary and not decisive. Companies still make strategic decisions about going public, and the rate can only affect the timing. Currently, about 50 companies are interested in entering the stock market, but this number is not enough.

• In order to fully fulfill the task of developing the stock market, it is important to ensure the protection and guarantees of investors' rights, as this will allow people to purchase securities more actively. Also, insufficient financial literacy of the population remains a serious barrier, which limits the number of long-term investments and increases market volatility.

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How will the stock market develop?

• A draft law designed to counteract stock market manipulation is being developed in Parliament. It is planned to introduce new restrictions for insiders in order to increase transparency and fair trading. These measures should strengthen trust and create more equitable conditions for the functioning of the financial market.

• The Ministry of Finance and the Central Bank are also working to strengthen control over compliance with insider trading rules. Formally, the legislation is quite strict, but in practice the use of internal information is still widespread, including in companies with state participation. Given their significant share in the Russian stock market, the authorities intend to review the standards so that such cases become an exception rather than a common occurrence.

• To achieve these goals, simultaneous growth of exchange trading with friendly countries is also necessary. Russia is working with its EAEU partners to form a joint financial space. An agreement has already been signed to ensure the cross-border admission of securities.

• The government is discussing a new incentive model for the heads of state-owned companies. This system will focus not only on the fulfillment of government tasks, but also on indicators related to the market value of shares and the amount of dividends. This should increase the efficiency of state corporations.

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Why did it take this and what other changes do the sector need?

• The Central Bank is constantly expanding educational formats to improve the financial literacy of the population so that they understand all the tools for increasing capital. For example, podcasts and social media posts are used for young people, while face-to-face meetings are used for the older generation, particularly at city events, libraries and post offices. So far, most of the population chooses conservative investment tools, but the situation may change in the coming years with the continuation of information policy.

How will an active stock market affect the economy?

• The development of the stock market can have a positive impact on the development of the Russian economy, as it will stimulate the growth of companies, as well as increase the number of financial transactions. In addition, an active stock market will allow enterprises to attract more investments for large-scale projects. Due to this, production facilities will be updated and innovations introduced more often. All this will generally increase the productivity and competitiveness of the economy.

• The formation of an active exchange environment creates opportunities for investors to invest in a variety of industries, which contributes to the emergence of many different sources of financing. This reduces the economy's dependence on individual sectors. The development of the stock market also increases the transparency of financial reporting. All this strengthens investor confidence. In addition, stable capitalization mechanisms for companies are being formed and tax revenues are growing due to an increase in financial transactions.

• A steady increase in the capitalization of the stock market is directly related to the growth of company profits and an increase in dividend payments. At the same time, an equally important condition is the trust of citizens: when buying shares, investors must be sure that their rights will be respected and they will be able to receive dividends in the future. It is the combination of high returns on capital, business profitability, and strict adherence to the interests of investors that plays a key role in the long-term growth of the stock market. These factors have a much stronger impact on its development than the interest rate.

When writing the material, Izvestia interviewed:

● Dmitry Golubovsky, a financial analyst, economist, and market expert;

● Alexey Bacherov, Director and Managing Partner of the ABTrust Investment Partnership, Associate Professor at the HSE Graduate School of Business.