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The Role of Financial Markets in the Investment Process
15 February 2019
12:00—13:15
KEY CONCLUSIONS
Debt financing dominates for investment projects in Russia

We have an obvious imbalance with bank financing being used to fund investment projects. On the other hand, there are good examples of how banks are moving towards innovative financial engineering and launching new products, among other things — Vladimir Dmitriev, Vice President, Chamber of Commerce and Industry of the Russian Federation.

Russia faces the challenge of drastically increasing investment

In 2024, investment in fixed assets should amount to RUB 45 trillion. Today, it amounts to RUB 17 trillion — Vladimir Gamza, Partner of the Group of Financial and Consulting Companies FalconFinance, Audit Group.

The stock market and citizens’ funds could be a source of long-term money for the economy

The groundwork is being laid so that Russian can advance in terms of developing the stock market and provide our economy with long-term and relatively cheap money — Vladimir Dmitriev, Vice President, Chamber of Commerce and Industry of the Russian Federation.

We have 18% in investments. Cash and deposits account for everything else. [...] I believe that the structure of Russians’ savings will change radically within ten years. The share of investment products will reach at least 60% — Vladimir Potapov, Chairman of the Board of Directors, Chief Executive Officer, VTB Capital Asset Management.

ISSUES
Investors are not interested in funding long-term projects

People have no mood for investment. It’s a speculative mood. [...] There is demand for people to invest somewhere. The main problem is where to invest — Sergey Bezdelov, Director, Center for Digital Economy Competencies, Plekhanov Russian University of Economics.

Lending has increased overall, but only at the expense of individuals. Lending to the real economy by non-financial organizations has decreased when compared to GDP — Vladimir Gamza, Partner of the Group of Financial and Consulting Companies FalconFinance, Audit Group.

Any investment is measured in terms of its targeted nature and how much it precludes the risks of potential losses — Sergei Belyakov, President, Association of Non-State Pension Funds; Chairman of the Management Board, National Association of Investment and Development Agencies; Chairman of the Presidium, The Retail Companies Association.

Insufficient development of the financial system in the regions

We are facing a catastrophic situation in terms of the development of regions through the credit system. The regions have no financial system [...] In 17 regions, there isn’t a single regional bank, while in another 17 regions there is only one regional bank — Vladimir Gamza, Partner of the Group of Financial and Consulting Companies FalconFinance, Audit Group.

SOLUTIONS
Creating incentive mechanisms for long-term investment

Decisions have been taken about the Government being ready to take on risk associated with long-term investments as part of financing for the project factory that Vnesheconombank is launching. If the interest rate deviates too much from the key rate, the Government will undertake the risk of this deviation. Consequently, our banks will be able to credit long-term projects more actively — Anatoly Aksakov, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Financial Markets; President, Association of Regional Banks of Russia (Association ‘Russia’).

If the state truly wants to attract long-term money to the economy, and it’s almost always private investment, [...] then we need to create opportunities for strategic investors by supporting their risk appetite — Sergei Belyakov, President, Association of Non-State Pension Funds; Chairman of the Management Board, National Association of Investment and Development Agencies; Chairman of the Presidium, The Retail Companies Association.

The regions have a very important role in stimulating investment processes — Yaroslav Lissovolik, Senior Managing Director, Head of Analytical Directorate, Sberbank.

Permanent financing arrangements need to be created. [...] Securitization could become one of the market drivers [...] We have established a special working group with the Bank of Russia that has long been developing lending standards for subsequent securitization. [...] We have developed standards for securitization itself — Dmitry Golovanov, Chairman of the Board, SME Bank.

We need a transmission mechanism to turn savings into investments. [...] We need a special programme for the development of institutional investors, the development of regional financial systems, and the legalization of shadow capital in the country — Vladimir Gamza, Partner of the Group of Financial and Consulting Companies FalconFinance, Audit Group.

Improving financial legislation

We have adopted a law on syndicated lending that is close to global practices — Anatoly Aksakov, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Financial Markets; President, Association of Regional Banks of Russia (Association ‘Russia’).

Electronic digital areas of focus will also be actively developed. We have discussed issues related to digital laws and come up with a schedule for their adoption. The market has been waiting for a law on the investment platform for a long time — Anatoly Aksakov, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Financial Markets; President, Association of Regional Banks of Russia (Association ‘Russia’).

Introducing digital technologies in the financial sector

Digitalization is something that has become part of our life. There’s no getting around it. More than 30% of the population already uses online banking [...] and this figure will soon top 60–70% — Vladimir Potapov, Chairman of the Board of Directors, Chief Executive Officer, VTB Capital Asset Management.

Digital banking is sort of an alternative sector of the market. [...] It’s more for consumer lending and small and medium businesses, but still we have to start with something — Vugar Aliev, Partner, Head of Financial Services Practice, KPMG.

Attracting external financing

We won’t be able to ensure serious economic growth without looking for ways to attract external resources. One of the options for attracting foreign resources is to work with development banks. [...] This is very important for the Russian economy — Dmitriy Pankin, President, Chief Executive Officer and Chairman of the Board of Directors, Black Sea Trade and Development Bank.

Enhancing the investment awareness of the population

Investments are accessible, but it's not easy. That is why the public needs to be educated with the help of robot advisers and quality analysts. Financial awareness will be a very important subject for us — Vladimir Potapov, Chairman of the Board of Directors, Chief Executive Officer, VTB Capital Asset Management.

The material was prepared by the Russian news agency TASS