Russian Investors flock to Bonds as Interest Rates Fall, Equity Markets Cool
Moscow – A notable shift is underway in the Russian investment landscape, as private investors are rapidly moving funds from customary bank deposits into bonds following recent interest rate cuts by the Central Bank of Russia.The trend, observed throughout the third quarter, saw record net contributions to securities accounts, according to a report by The Moscow Times.
The Central Bank’s decision to lower its key interest rate from 21% to 18% between June and July triggered the move. This reduction made bond yields comparatively more attractive than declining deposit rates offered by Russia’s largest banks, slowing growth in bank deposits.
A key driver of the bond surge is the longer duration offered by these investments. Unlike typically short-term deposits, bonds provide maturities ranging from several years to over a decade, allowing investors to lock in favorable returns for extended periods. This was reflected in rising prices for both government and corporate bonds on the Moscow Stock Exchange during the quarter. Notably, quasi-monetary bonds – designed to protect against ruble devaluation – also gained popularity among individual investors. Corporate bonds saw the largest inflows,followed by government and municipal bonds.
However, the shift to bonds occured alongside a cooling in the equity market. Stalled peace negotiations regarding Ukraine and the implementation of new tax measures negatively impacted investor sentiment, leading to a decline in the Moscow Stock Exchange index and a reduction in share ownership by retail investors.
While the total number of brokerage accounts continues to grow, the number of active investors remains relatively limited. Analysis excluding accounts with minimal holdings suggests a core group of dedicated participants is driving the investment activity.
Source: The Moscow Times (https://www.themoscowtimes.com/2025/12/03/russians-pour-record-funds-into-domestic-securities-as-rates-fall-a91332) and businessam (https://businessam.be/russische-centrale-bank-verlaagt-rente-tot-2026-om-inflatie-te-beheersen/)
