More advanced investors should pay attention to the debt market, advised Ruslan Spinka, director of sales and customer service at the investment company Fontvielle. He told Izvestia about current investment areas at the beginning of 2024.
“The key rate in Russia is now at 16% per annum. Taking into account the inflation target of 4% per annum and the price increase recorded by official departments, which is almost twice the target, a double-digit rate will accompany us throughout the first half of 2024. That is why I would advise building a strategy for working with capital based on a high rate, and relying on it,” the expert said.
According to him, the most obvious financial products that benefit from this situation are bank deposits. Financial institutions offer attractive conditions for both savings accounts and deposits.
“However, in any case, the expected return on them is lower than the key rate. Plus, during the registration process, many pitfalls emerge. The conditions vary depending on whether you are a bank client, whether you have a salary card, whether you are ready to use certain services and sign up for additional paid subscriptions,” Spinka emphasized.
Typically, all this reduces real yields by another couple of percentage points, he explained.
“That is why I would recommend that more advanced capital owners pay attention to the debt market. Considering that on average the Russian stock market adds 12–15% per year, and bonds can now be found with higher yields, this is worth taking advantage of,” the expert noted.
He advised considering three investment areas – long-term federal loan bonds, floaters and new bonds of first-tier companies.
Speaking about long-term federal loan bonds that the Russian government issues, borrowing funds on the domestic market to achieve government goals, the expert advised betting on long-term securities with maturities in 2036 and later.
“Then, due to high duration and a decrease in the key rate, their revaluation will bring increased income. This is a fairly conservative and highly reliable instrument,” he clarified.
At the same time, the expert explained that floaters are bonds with a variable coupon, which is most often tied to the money market rate RUONIA (Ruble Overnight Index Average), which in turn correlates with the key rate.
“The coupon implies a small premium to RUONIA, usually at the level of 1–3%. The option is suitable for those who are not new to the stock market,” he added.
At the same time, we can consider new bonds of first-tier companies – the largest and most stable Russian businesses, the expert clarified. As he said, in order to attract financing, they are currently forced to offer returns on securities higher than on the same banking products. For market participants, this is an excellent opportunity to lock in a high coupon rate, Spinka believes. He recommended taking bonds with short or medium duration and a circulation period of 1–3 years.
“In conclusion, I would like to note that in any economic situation in the stock market you can find securities that benefit from the current state of affairs. And in 2024, given the high key rate, investors should take a closer look at bonds,” Spinka concluded.
Earlier, on December 19, Managing Director for Investments of PSB Management Company Nikolai Ryaskov told Izvestia that further growth of the stock market is predicted in 2024. According to him, this will be primarily due to an increase in budget expenditures, an increase in nominal incomes of the population and an increase in price multipliers.
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