How to put money to work

Nowadays few people invest in shares and bonds. However, it can be more profitable than putting money into your bank account. Executive Director of the Association of Securities Market Participants, Anton Andreenko, has agreed to outline the risks and profitableness of various investments, and to tell us about the prospects for development of the stock market.

What options are available today to increase capital?

In my opinion, shares and bonds could become quite a good alternative to the usual deposits for everyone in the near future. Already the yields on some of them are frequently higher than on bank rates.

Today, the number of bonds in the total amount of securities traded on the exchanges exceeds 90 percent. Such rapid growth can be explained by the fact that tax concessions are applied to incomes from such investments, but this will not be the case from next year. The stock market may not be so attractive then, and as a result, an alternative way of profiting from a sector of the economy will be reduced.

Now everyone can buy housing bonds from a developer, at a stock exchange or in a bank. Is this a realistic option to solve the housing problem?

These bonds are mutually beneficial; the building organisation does not need to take a loan, it receives the necessary investments through securities issued by this organisation. While citizens, when buying each housing bond, receive a square metre of accommodation.

Only half of our population has exchanged property ‘cheques’ for shares. What is the reason?

Whilst yields on bonds are fixed, on shares they are variable so money can be received in the form of dividends, or at the expense of an increase in their market cost. For example, we can remember when one share in the Olivariya brewery was offered for sale for 150,000 Roubles, and since then the cost has multiplied. A similar situation occurred with the Kommunarka Factory. And we should not forget the successful IPO (initial public offering) for the Minsk Sparkling Wines Factory. People are now understandably wary of similar deals. For example, the open sale of shares of the Gomel Fat Plant has recently ended. There were just 23 thousand from four million shares sold. In my opinion, it was a rather interesting offer. Nevertheless, an unspoken rule exists in the market: the greater the profitableness promised, the more risks it has. Instead of valuable assets it is possible to buy a worthless piece of paper. In order to avoid such a situation, one should consult the professionals. We have seventy broker’s offices for this purpose.

Can citizens themselves participate in trading sessions?

In the trading system of currency-commodity exchange there are more than 60 thousand clients. Of these, 70 percent are individuals. Though the share of their operations, of course, leaves much to be desired.

Why are shares in our industries not in demand abroad?

We have successfully managed some bond flotations abroad. But the procedure of carrying out IPO abroad is expensive and costly and our standards of the granting of financial accountability differ from western ones. It’s almost as if we don’t train economists who are capable of making documents which are transparent and clear for an investor. As for our market, of course it is small, but services for the issue of shares in our country are much cheaper than abroad. There are already six or seven businesses that have floated their shares on the currency and stock exchange and the majority of them were successful. In the next few years we will see some rather interesting events. Within the limits of the Single Economic Space, there are plans to synchronise legislation on the securities market by 2020. We will then be able to carry out IPO freely on the Russian or Kazakhstan exchange.

What is necessary to ensure that the securities market works at full strength?

We need to complete the process of privatisation. The majority of the shares in profitable industries are owned by the state. In my opinion, we need to develop an institute of confidential management and allow bankers to invest and increase the financial means for their clients benefit. The system of pension savings should be launched so that investment resources with a life of up to 30 years appear in the economy.

There are interesting possibilities for share funds, which, if created, will be able to involve the population and even buy out state enterprises. That means that we will have greatly increased potential for development.

Quick survey

Correspondent Vladimir Bychenya questioned residents of Soligorsk

Svetlana Shchavruk, Chair of the Supervisory Board of the Building Trust #3 JSC:

Workers of the trust who once changed nominal privatisation ‘Property’ cheques for shares in the enterprise, grow old and leave the collective. The administration of the enterprise applied to the authorities and received a permit to sell part of the shares owned by the state to workers of the trust. During the last few years, the value of our shares has increased; therefore, the builders who are directly engaged in construction willingly bought them. The shareholder and part-owner of the business always works better than a hired worker.

Victor Borodkin, trade union worker of Belaruskali JSC:

It is necessary for us to develop the stock market. It will stimulate industry to work more efficiently and attract investment from the population while investors will receive one more way of favourably investing their money. Many workers of the enterprise think so.

Alexander Davydovich, pensioner:

I have neither shares, nor bonds, or other securities. My wife and I spent all our income on education for our children, we helped them to receive higher education and find their way in life. In my opinion, it is the most reliable investment of means.