How to start to invest to Russian stock market
By Interactive brokers
Content
- How to add access to Russian market
- Convert your currency to russian rubles
- Buy stocks of the Russian company
- Risks Associated with Russian Stocks
As you already know, there are many oppotunities in the emerging markets. While American stock market looks like a bubble and private investors seek other ways to park their wealth, we can find safe haven for money.
There are many companies in Russia which can quickly recover after next market’s correction, or pay some dividends without big risk. Yes, there are dividend aristocrats in Russia too. Their history is not as long as the history of the American companies, but it would be a good investment idea with a great div yield. Also you can buy companies which depend on commodity export and try to win some “reward for the risk”. For example, let’s take a look at “Nornickel” — it is a Russian nickel and palladium mining and smelting company. Everybody knows that nickel is used for batteries in electric vehicles so it is a great forward-looking company. It’s dividend yield is near average 8–10% and this is great for a “blue chip”.
Add acceess to Russian stock market
So, first of all, we need to add Russia stock market for your Interactive Brokers account. Go to the “Manage account” menu — “Account Settings”
Here we can see the “Trading Experience & Permissions” section where we can add and remove different countries in order to buy and sell stocks. Just tap to “add” and add Russia to the list of your countries.
After these manipulations you will have access to the Russian stock market. Full table of all Russian stocks we can find on a special page on the Interactive brokers site. It includes the most liquid papers from MOEX — Russian stock exchange.
Convert currency
Secondly, in order to convert currency we need to open the left panel on the main page of the client’s portal and choose the menu “Convert Currency”. Next, we need to put the volume of our currency which we need to convert and the calculator will convert sum for you. If we don’t have enough money, the calculator marks sum by red color. When we tap the “Preview” button we can see fees for converting. After tapping the “Submit” button Interactive Brokers will convert your currency in order to you by forex course with the little market spread (less than at the banks).
Buy stocks of the Russian company
We can buy stocks by different ways — through the client’s portal, by the TWS desktop client or IBKR mobile client. We need just to find the stock from the Russian companies list by the ticker(symbol) and make the market order. Let’s find the “Nornickel”. Go to the left panel, tap “Order ticket” and we get to the main “Stocks” tab for buying papers. We need a “GMKN” ticker. Add quantity, order type (limit or market) and “time in-force”- time while the order will be active. We can see the chart with the price and candles. Also we can see a preview for our order and a button to submit it.
After that the paper would be bought and added to our portfolio.
Risks Associated with Russian Stocks
There are few tips for people who want to buy Russian stocks. Take a look on this article “How to Invest in and Analyze Russian Stocks”. I think you must know about these risks and I added some of them to this article:
- Less stability and transparency: The U.S. stock market is widely considered to be a safe-haven for investors, so most foreign markets, including Russia’s equity market, tend to be both more volatile and less transparent by comparison.
- Exposure to energy markets: Since oil and gas account for about half of Russia’s revenues and more than 60% of its exports, most Russian ETFs hold as much as 40% of their assets in the energy sector, which translates to significant commodity risk.
- Potential for social unrest: Socioeconomic problems could cause issues for investors. Throughout 2019, multiple protests have seen thousands take to the streets of Moscow.
- Depletion of reserves: Russia depleted its reserve funds throughout 2017, and the fund was ultimately closed in January 2018. The roughly $17 billion left in the reserve fund at that time was moved to the National Welfare Fund.
- Ruble Inflation to investor’s currency ratio: It is part of the political risk and dependence of oil prices. Investors need to know how the risk is related to government movements and check currency’s inflation. There are many moments for good investing chances while oil prices increase.
Conclusion
Investing in Russian companies may be very interesting and profitable in the future, because there are many good and cheap companies there. You can devesificate your portfolio by Russian stocks and increase your portfolio’s return. But you need to review your risk profile and check it out.
