Ivanovs and Financial Markets - Long-Term Growth Potential Remains for Retail Brokers

In 2H21, the number of individual brokerage accounts among the top 25 brokers in Russia grew just 18% H-o-H after the 50% growth in 1H21. However, the share of Ivanovs who prefer financial instruments as a way to save money rose 2 pp to 8% in 2H21 H-o-H. Meanwhile, cash accounts and deposits remained the most preferred way of saving. About 15% of respondents had a brokerage account. More than half of the investors we surveyed were not day trading, but were instead medium- or long-term investors, while they expected to achieve returns of around 11% on average. About 55% of them had less than R10k on their brokerage accounts. The main reasons they cited for investing in stocks and bonds were the higher returns and the increased ease of using online brokerage accounts.> Ivanovs prefer cash, savings accounts and financial instruments to foreign currency and real estate for saving. The share of Ivanovs who cited cash as their preferred way to save money increased 2 pp versus June 2021 to 45%. At the same time, the share of those who preferred financial instruments increased 2 pp H-o-H to 8%, which we attribute to accelerated inflation. In terms of the duration of the investments in the financial markets, the majority of Ivanovs noted that they invest for more than 1.5 years. > Long-term growth potential for retail brokerage remains. The share of Ivanovs with a brokerage account increased by 1 pp H-o-H to 15% in 2H21, which corresponds with the 5.6 mln accounts that Moscow Exchange reported were opened in 2H21 among Russia's top 25 brokers. Another 26% of respondents (up 3 pp H-o-H) said that they planned to open an account, indicating significant long-term potential. Naturally, the wealthier portion of the population (with monthly household incomes above R60k per person) had the highest share of respondents with brokerage accounts (27%), though it was the R50k-60k income group that saw the fastest pace of new account openings (up 10 pp H-o-H). Regarding the share planning to open an account, the most notable increases were seen in the groups with incomes of less than 20k or R30k-40k per household member (up 5 pp H-o-H). However, we expect account growth going forward to be more modest than what the survey might indicate - we expect it to stay close to the level seen over 4Q21 (1 pp Q-o-Q), with the groups mentioned above making the biggest contribution.> The majority of retail investors among the Ivanovs have less than R10k on their brokerage accounts, but most respondents planned to invest more. According to our latest survey, 55% of the retail investors among the Ivanovs had less than R10K on their brokerage accounts. However, 58% of respondents who either had a brokerage account or planned to open one intended to invest more in the stock market over the next 12 months, while only 14% said they would not (down 3 pp H-o-H). In terms of the reasons the Ivanovs invest in the stock market, higher returns and the increased ease of use of online brokerage accounts were cited as important reasons by 57% and 51%, respectively. Low deposit rates also remained an important motivating factor for investing in the stock market, cited by 49% of investors, though this share was down 3 pp H-o-H.> Some 71% of Ivanovs expect a return of less than 12% per annum from their investments. We asked our respondents what kind of return they expect from their investments in the financial market. Among those who have a brokerage account or plan to open one, 19% expected a return of 3-5% per annum, while 29% expected a more than 12% return by investing in stocks and bonds. This is not surprising given that the most popular reason given for investing in financial markets was the higher expected returns. Around 15% of Ivanovs with a brokerage account traded daily, while the share of inactive account holders stood at 22% (down 4 pp H-o-H).> Sber and Tinkoff the main brokers among Ivanovs. As in our survey, Moscow Exchange's data shows that Sber and Tinkoff had the highest share of brokerage account holders. The latter saw a significant increase in clients in 2H21 while other brokers saw a decline in market share. A similar dynamic was seen among the Ivanovs: the share of respondents who had Tinkoff as their broker increased 1 pp H-o-H in 2H21. In terms of the key considerations when choosing an online brokerage account, Ivanovs cited pricing and the ease of making trades as the most important factors, with the range of available securities and trade execution not far behind.