Russian Investor Statistics - Retail Investors Shake Off the Correction, Buy the Dip

Moscow Exchange has released retail investor statistics for November. Retail brokerage account holders bought R91 bln ($1.2 bln) in November, a second consecutive month of record inflow. Direct brokerage accounts alone have now purchased a net R479 bln ($6.5 bln) in equities YTD. Inflows to equities via mutual funds also increased, albeit at a less swift pace, with R21.6 bln ($337 mln) coming into the market versus the previous R21.4 bln. YTD inflow to equities via mutual funds of $2.7 bln brings the YTD total for mutual funds and direct brokerage accounts combined to some $9.2 bln.In several recent notes we have questioned whether rising rates could cool some of the recent enthusiasm for stocks among retail investors, as deposit rates and bond yields have become more attractive. Moreover, 60% of the retail brokerage accounts now registered on the exchange did not exist the last time the market saw a correction as it did last month, with the RTS having recently declined 15% and the ruble-denominated MOEX index having dropped 11%. This has raised the question of how retail investors would react. Thus far, retail investors appear unfazed by the correction and willing to buy the dip. This to some degree echoes the results in our last two Ivanov surveys, which indicated that not only high dividend yields and a lack of clear returns elsewhere are drawing investors into the stock market, but also the improving ease of access to the market and a rising appreciation for securities' return potential (while not remarking either way on risk).With $627 mln placed in stocks cross-listed in Moscow last month, the combined numbers suggest nonresident investors withdrew $937 mln from the market amid the correction. Passive funds added $175 mln to Russia in the month according to EPFR Global, implying that more than $1.2 bln may have exited Moscow listings via nonresident active funds.New brokerage accounts reached more than 1.0 mln for the first time, albeit the monthly growth rate eased from 6.8% to 6.5%. Total brokerage accounts have now reached 16.5 mln. Active accounts at nearly 2.8 mln edged up to 16.7% from the previous 16.0%.Moscow Exchange also reports the top 10 stocks in the average retail portfolio every month, and their relative weight among that top 10. A full breakdown of the aggregate retail portfolio and weights is not currently available.This month saw Gazprom pull back from records to 28.0% from the previous month's 31.9%. Sber was among the key gainers weight-wise, increasing from 10.3% to 14.3% amid a 12% rally in the stock. NLMK rose from 6.1% to 6.7% ahead of this month's dividend and Nornickel rose from 15.1% to 15.7% on a month that saw a declaration of a dividend to be paid in January. Meanwhile, Aeroflot exited the disclosed top 10, while Lukoil returned with a 6.0% weight.