Russian stock market: investment opportunities, expert advice

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The Russian stock market is currently in a difficult period. However, despite this, there is a trend in which many citizens are thinking about buying securities in order to invest and increase their own capital. According to experts, the purchase of shares protects investments from inflation, and with sufficient cash injections, some even manage to form a passive source of income. However, for this you need to know a lot of nuances that the Russian stock market is fraught with.

Features

Each phenomenon in the economy has its own distinctive features. The stock exchange where securities are traded is no exception.

The situation is such that the Russian stock market provides its own participants with only a formal possession of a security. In fact, the shareholder does not becomeco-owner of the enterprise and in no way influences the decisions made regarding business management.

However, this feature has a downside. When purchasing shares of the Russian stock market, it is not necessary to understand the features of various types of business. Every company already has competent managers, and the holders of securities can only make a profit without delving into the intricacies of the entrepreneurial activities of each corporation.

So, the realities of the Russian stock market are such that small investors do not actually influence the activities of the enterprise, and nothing is known about attempts to acquire a controlling stake in large companies. The reason, most likely, is that investors do not undertake them.

Current situation

The state of the Russian stock market, as well as the entire economy of the country as a whole, can be called difficult. There are many changes taking place on the stock exchange, which ultimately affects the decisions of potential investors. If everything is done correctly and with knowledge of the situation, even in crisis conditions, some investors manage not only to protect their own savings from ever-growing inflation, but also to increase them.

Prospects for the Russian stock market for the current period are very vague. This is due to the instability of the economy in general and the stock market in particular. Investors have to constantly improve their own knowledge and be able to process huge flows of information.

The situation on the stock exchange in today's realities is such that the presence of an investment portfolio still allows you to protect your ownfunds from inflation and increase their size. However, the existing problems of the Russian stock market should not be ignored.

For example, it is highly dependent on energy prices. When the global oil price falls, the securities of oil producing companies become cheaper, the ruble weakens, which will certainly be reflected in the stock market.

Investment opportunities

Even in conditions of economic stability, new opportunities are opening up. They allow investors to get new ways to profit. However, for this it is important to have a good knowledge of the basic principles and laws of the functioning of the market. This is the only way to catch the most important points for a profitable investment.

I must say that despite the development of the Russian stock market, in general, the number of citizens involved in stock trading is small.

For those planning to start, there are two main options:

• Entrust the management of own funds to a specialized fund.
• Do it yourself.

Each of the above strategies has its own characteristics. Let's discuss them in more detail.

Professional management

If your funds are managed by a competent specialist who knows the stock market of Russian companies, you will not have to delve into all the existing subtleties of investment activity. You simply entrust the management of your own funds to a specialized fund, which further representsyour interests in the stock market, and make a profit. However, a potential investor should pay close attention to the choice of such a fund. Otherwise, instead of the expected profit, you can get losses.

Self-management

This option is preferred by investors who know the peculiarities of the stock market and are willing to spend a lot of time to analyze information that is constantly updated. In addition, you need to have fairly strong nerves. In the stock market there are constant jumps in the value of securities. It takes incredible endurance to remain calm and make informed decisions even if your investment portfolio is rapidly depreciating.

Most inexperienced investors lose their own money precisely because of indiscipline. Noticing the drawdown of their own portfolio, they tend to quickly sell previously purchased securities. However, in the longer term, they could make a profit.

Expert Tips

• When it comes to trading stocks, there should be no fuss. Often the external picture is misleading for potential investors, especially beginners. Big players often take advantage of the lack of experience of amateurs and profit from their mistakes. As soon as an inexperienced investor sees a fall in the value of shares acquired earlier, he seeks to sell them as soon as possible, setting a low price. Such a favorable offer is used by large investors, buying up securities at advantageous offers.
• It is curious that in the stock market, profits can be made even when the stock price falls. Even if an investor does not have securities, he can borrow them from a broker, then sell them on the market and thus make a profit. Then you need to wait for the price to drop and at that moment it will be possible to buy shares at a low price, and then return them to the broker. The difference between the cost of the first and second transactions on the stock exchange forms the investor's profit. Experts say that such actions are quite simple.
• Don't trust the general hype. As a rule, large investors seek to mislead inexperienced participants in the stock market. To this end, they even spread false information in public sources. If you learn to distinguish between truth and lies, you can make impressive profits through investment activities.

Dealing

If you want to try your hand as an investor, you don't have to have large sums. You can start with small and feasible amounts for almost every Russian citizen. At first, it is important to receive not profit, but experience. Even with little money, you can become a participant in the stock market and gradually comprehend its basics.

It's easy to start trading in the stock market, contrary to popular belief. First of all, you need to find a broker with whom you can open a trading account. To start investment activities, it is advisable to deposit at least thirty thousand rubles into your own account.

Also for the implementation of varioustransactions with securities will require a specialized program called a trading terminal. Further, on weekdays during the stock exchange, you can make transactions with securities.

As you understand, the technical side of interaction with the Russian stock market is quite simple. However, for the successful implementation of investment activities, you need to know the nuances and subtleties of the functioning of the stock market, which, as a rule, are learned in practice.

Potential Income

For investors who are interested in the Russian stock market, the question regarding the level of income that they can receive is relevant. On average, securities bring owners a profit of up to forty percent per annum.

However, this figure may be different if you do not make a profit, but put it into circulation, acquiring more and more new securities. Particularly good at tracking earnings growth over the long term.

What are they buying?

The most popular shares on the Russian market are the most famous corporations in the country with big names such as Sberbank, VTB, Gazprom, Aeroflot and others. The main advantage that guarantees the possession of shares in these companies is not the potential profit, but reliability and liquidity. These corporations have significant authority, their shares are always in demand, so they are easy to sell if necessary.

In fact, transactions with such shares are carried out instantly. Except in cases where the investor is interested in acquiringa large shareholding.

The concept of capitalization

This term in the stock market means the total market value of joint-stock companies whose shares are listed on the stock exchange.

It should be noted that market capitalization depends not only on the current situation, but also on other indicators.

• Current phase of the business cycle.
• Exchange rate.
• Change in gross domestic product.
• Fiscal burden, etc.

Capitalization of the Russian stock market

The current situation in politics and the economy will certainly find its own reflection on the stock exchange. The value of securities of large Russian companies has changed a lot. And not for the better. Shares began to be sold much cheaper both on the domestic and foreign markets. The capitalization of individual companies decreased by fifty percent. However, even experts could not predict such a turn of events, allowing entrepreneurs to insure themselves in advance. This situation was a complete surprise for them and a powerful blow to the business.

The total capitalization of the Russian stock market is absolutely dependent on the political situation. Tensions with some countries create sudden and unpredictable swings that make it difficult for investors. If the situation continues to develop in this way, it is still inmore likely to lead to a deterioration in the situation on the stock market.

Currently, the capitalization of the Russian stock market depends on state support. The strong impact of policy on the economy can be mitigated by the introduction of appropriate measures that can at least partially reduce the losses associated with falling stock prices.

However, you need to understand that government measures aimed at supporting the stock market will entail spending budget funds. In fact, this will mean that financial losses to entrepreneurs will be compensated by increasing the burden on ordinary Russian citizens, who already bear the heavy burden of mandatory expenses.

Due to the instability that is observed in the Russian stock market, experts recommend avoiding investing in risky investment assets, and, no matter how unpatriotic it may sound, do not keep your own savings in rubles. The recent collapse of the national currency eloquently demonstrated what consequences this could lead to.