Moscow mulls ways to attract foreign investors to Russian bourses

MOSCOW: Russia is ready to amend legislation to encourage an influx of foreign investors to its stock exchanges, Anatoly Aksakov, head of the financial committee in the lower house of parliament, said on Wednesday.

Russia has for years sought to promote Moscow as a global financial centre but geopolitical tensions with the West that led to economic sanctions and soured bilateral relations have seriously hampered that ambitious goal.

Russian brokerages say Moscow needs to ease taxation rules and lower profit tax for non-residents who buy shares traded in Russia. The tax currently stands at 30%.

Concerns about corruption and the rule of law in Russia are also often cited as key obstacles to attracting more foreign investors to its financial markets.

However, lobbyists point to technologies that Russian bourses offer and its time zone advantage that allows it to trade US stocks when the US market is closed.

"Digital technologies now allow an investor to work anywhere, and if we have the most technologically advanced platform... then we can implement the idea of (making Russia) an international financial centre," Aksakov told a conference.

It also needs to tweak legislation without harming the domestic market, he added.

The trading of more foreign stocks on Russian bourses would give a boost to Moscow's amibition to become a regional financial hub, Alexey Timofeev, head of the National Association of Stock Market Participants (NAUFOR), told a conference.

Russia's largest bourse, the Moscow Exchange, trades foreign instruments, including US blue-chips, in roubles, while its closest rival, the Saint Petersburg Exchange, offers foreign stocks denominated in dollars and euros.

Foreign stocks are popular among Russian investors, especially given the rouble's weakness and a record low deposit rates with banks.

Roman Goryunov, president of NP RTS Association, the main shareholder of the Saint-Petersburg Exchange, said a larger number of foreigners buying US stocks in Russia would lead to increased demand for Russian securities.

The central bank has called on Russian brokerages to primarily offer Russian stocks to retail clients to make their money work for the economy at home rather than being invested in companies abroad.