Some investors still consider Russia as being impenetrable, while others already invested here and see it as one of the most attractive markets in the world for investments, as the case of Octavian Constantin Patrascu, business developer, with experience o Russian capital market. Although the legislation is changing and it does not encourage too much the foreign investors, Octavian Patrascu is decided to not give up the presence in Russia.
From the fall of the Soviet Union, the country’s economy has made huge steps in order to become a free market. Between 2000 and 2008, for example, the country’s GDP has doubled, becoming one of the most attractive emerging market, included in what we call BRIC.
In Russia, many investors are found in the energetic industry, given that the country is a leader in oil and gas exportation, as well as in steel industry. Some niche industries, such as information technology and telecommunications, have met a significant increase. Particularly, software development and outsourcing industry are emphasized through the fastest growth. At the same time, Moscow Stock Market has become more and more attractive for investments, together with online trading, as Octavian Patrascu, business developer states.
It is to mention the fact that Moscow Stock Market was incorporated in the same year as Bucharest Stock Market, along with the implementation of Russian trading system (RTS), in 1995. RTS was designed after the Nasdaq model and, in 1998, the stock market introduces its own online system. Initially, the Moscow Stock Market was a nonprofit organization but later it become a company, after the merger between RTS with MICEX, in 2011. RTS is the main index of the Russian stock market, aiming the evolution of the best 50 listed companies.
“The great advantage Russia represents is its huge potential, both from the population density point of view as well for its great appetite for online investments”, states Patrascu Constantin Octavian, who adds that it is worth mentioning that in Russia there are forbidden the casinos and gambling rooms, meaning everything related to gambling.
Russia has an enormous population of 142 million citizens, with increasing personal incomes, annually, of 10%-15%, according to the estimates of the professionals as aboutmoney.com states.
The highest risk in Russia is represented by the legislative gaps. Russian does not have laws to protect the investors and has some risks, as well as a high instability compared to a free market, such as the one of the United States, for example. Another risk is related to the danger of the outbreak of some social discontents, meaning that, although the government is trying to implement social reforms, there are many social-economical problems which might lead to large imbalances.
Octavian Constantin Patrascu says that he tried to introduce institutional clients on the Russian market and to incorporate an office in Moscow, but “legislation regarding capital markets is about to be changes:, and the tendency is that the “Russian market to become less and less accessible to foreign investors”.
Therefore, in the new law of Russian capital market, which is to be implemented from October 1st, 2015, it is mentioned the fact that all the companies trading on the Forex market, and wishing to offer their services in Russia, must obtain a Forex dealer license, Until January 1st, 2016. There are some hints that the law might be more loose, but one has to know that, until then, the maximum leverage is of 1:50, which it does not satisfy the players in this industry, emphasizes Patrascu Constantin Octavian.
Moreover, the law refers only to Forex transactions, not to the binary trading also (Binary Options Trading) or CFD, not being very clear what might happen with these services. Also, one does not refer to Russian traders using Forex service of the foreign brokers.
Also, the companies entering the Russian market must have the headquarters in Russia, a Russian executive manager, holding, of course, a qualification certificate from the Russian Central Bank and who will employ the personnel made of Russian citizens who, on their turn, must have a high professional education, explains Constantin Octavian Patrascu.
The respective company must have a share capital of minimum 1 million de rubles and to be a SRO forex member (Self-regulatory organization). After gaining the SRO member quality, a request for Forex trading licensing must be submitted to the central bank, which has 60 days to analyze the request and offer an answer.
These are some of the legislative provisions which are, either unclear, either they imply a heavy bureaucracy, besides issues which are not found in the law, as resulting from the presentation of Patrascu Octavian regarding the new Russian capital market law.
Anyway, all of these do not discourage Constantin Octavian Patrascu, who claims that he is thinking the possibility to offer, in the future, consultancy to a local broker, not-announcing the idea to be present in the Russian market. “For now, we are talking hypothetically” states Patrascu Constantin Octavian, having in view that “first of all a new law must be implemented in order to see the next tracks for a business”.
Until then, the business developer offers some clues regarding the investment on the Russian capital market, which may be accomplished either ETF (Exchange Traded Funds), either directly in shares traded on the stock market. Before any investment, it has to be assessed the health of the economy, claims Octavian Patrascu, and the useful information in this regard can be found, for example, in the site of the World Bank.
Investors wishing to invest in RTS index, can analyze component stocks by using the site in English of RTS, where they can find links to the sites of the listed companies, having annually reports posted and other information on their business, adds Patrascu Constantin Octavian.
This article was published in Wall-Street by Patrascu Octavian