Worst risk to Russia's stock market named
Russian Central Bank Governor Elvira Nabiullina, speaking at the NAUFOR Russian Stock Market Conference 2019, named the main risk to Russia's stock market.
"I see the main risk in the industry largely being focused on short-term benefits and a fairly large margin," RIA Novosti cited the head of the Russian Central Bank as saying.
According to her, in the pursuit of short-term profit such practice as mis-selling is massively used - when a product or service is deliberately misrepresented or a customer is misled about its suitability. Such a trend, Nabiullina noted, is observed in a number of market segments, primarily in investment life insurance.
The governor of the Central Bank stressed that the regulator is keeping in focus the issues of protecting the investor from such risks.
She added that "serious market development" is often associated with some risks that are currently observed.
The chief economist of the Institute of Stock Market and Management, Mikhail Belyaev, speaking to Vestnik Kavkaza, noted that the stock market entry by individual investors is extremely important for its development. "There are mainly individual investors in the Western markets, although not only directly, but also through collective investment funds, through insurance companies and pension funds. These organizations, having collected the investments of individual investors, get to the stock market with huge sums of money, acting there in the interests of their clients," he said in the first place.
At the same time, the expert drew attention to the fact that it's mainly newcomers to the stock market who are striving for the short-term profit, designated by Nabiullina as the main risk of the market development.
The chief economist of the Institute of Stock Market and Management spoke about how to minimize the main risk to the Russian stock market's development. "We need to start by creating the conditions for issuers to come to the market. When issuers come with protected securities, when the stock market is regulated, we can say that the arrival of investors and long-term money has become more real," he stressed.
"It is also necessary to support collective investment funds. Improving financial literacy of the population is also important," Mikhail Belyaev added.
"The stock market exists not so much for private investors to make a profit, but rather for companies to have the opportunity to place their securities there and receive funds for development. By the way, it should be noted that the institution of financial consultants should be also developed," the economist concluded.