Russian Investors flock to Bondsโค as Interestโ Rates Fall, Equity Markets Cool
Moscow – A notable shift is underway in theโ Russian investment landscape, as private investors are rapidly moving funds fromโ customary bank deposits into bonds following recent interest โขrate cuts byโค the Central Bank ofโ Russia.The trend, observed throughout theโข third quarter,โค saw record netโ contributions to securities accounts, accordingโฃ to a report by The โMoscow Times.
The Centralโค Bank’s decision toโ lowerโค its keyโ interest rate from 21%โค to 18% between June โขand July triggered the move. Thisโ reduction madeโ bond โyields comparatively moreโฃ attractive than declining depositโฃ rates offered by Russia’s largest banks, slowing growth in bank deposits.
A key driver of the bond surge โฃis the longer durationโฃ offered โขby these investments. Unlike typically short-term โฃdeposits, bonds provideโค maturitiesโฃ ranging from several years to over a decade, allowing investors to lock in favorable returnsโ for extended periods. This was reflectedโข in rising โprices โfor both government and corporate bonds on the Moscow Stock Exchange during the quarter. Notably, quasi-monetary bonds – designed to protect โฃagainst ruble โฃdevaluationโ – โalso gained popularity among individual investors. Corporate โคbondsโฃ saw the largest inflows,followed byโค government and municipalโ bonds.
However, the shift to bonds โฃoccured alongsideโ a cooling in the equity โฃmarket. Stalled peaceโค negotiations regardingโ Ukraine and the implementationโ of new โtax measures โขnegatively impacted investor sentiment,โ leading to a โคdecline โin the Moscow Stock Exchange indexโข and a reduction in share ownership by retail investors.
While the total numberโ of brokerageโ accountsโ continues to grow, the number of active investors remains relativelyโฃ limited. Analysis โฃexcluding accounts with minimal โคholdings suggestsโข a coreโ group โขof dedicated participants is driving the investmentโฃ 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/)