Retail Investor Statistics - Buying The Dip

The Moscow Exchange has published retail investor statistics for January. Retail investors bought R28.5 bln ($380 mln) worth of Russian stocks. Most of the inflows materialized in the last week of the month (R44.5 bln), while early in the month retail investors were net sellers. The inflows seem to be a reaction to the late-January market correction. As we have argued in previous notes, individual investors act as a cushion for the market in times of downward pressure. In the meantime, they are still holding on to a significant amount of the cash received in November when they sold R115 bln worth of stock to nonresidents. > Flows into mutual funds stayed positive at R28 bln, of which we estimate a third went into the stock market. > The number of brokerage accounts continues to grow fast and has reached 9.5 mln, of which 1.5 mln are active, i.e. with at least one trade carried out per month.> Data on individual stocks in the portfolio of retail investors shows that retail money goes primarily into underperforming stocks. For instance, the weight of Sber in the top 10 stocks held by retail investors jumped from 10.5% to 14.2%, while Yandex appeared in the top 10 with a 7.3% weight. In the meantime, the weight of Gazprom and Lukoil, which have outperformed nicely, fell by 4 pp and 2 pp, respectively. Essentially, retail investor flows mirror the moves of institutional investors, who reduced positions in domestic stocks amid increased political uncertainty while favoring "reflation trade" stocks in the commodity universe.