Russian politicians may be warning that U.S. sanctions will backfire and undermine the dollar, but to the middle classes, the appeal of investing abroad is only increasing.
TCS Group Holding Plc became Russia’s fifth-biggest brokerage by active clients in the space of just a few months by offering mostly foreign stocks. Its most popular investments include Apple Inc., Amazon.com Inc., Alphabet Inc. and Facebook Inc., according to Alexander Emeshev, vice president of Tinkoff Bank, which opened the trading unit in May.
Finam Investment, the top firm by active clients, meanwhile has about 15 percent of its funds in overseas equities, up from about 5 percent a year ago.
“On Western exchanges in general, there are more fast-growing and highly-liquid companies than in Russia,” Emeshev said in an interview. “Plus, the U.S. market has grown.”
About half of the 13 billion rubles ($194 million) invested by TCS clients is in foreign companies, Emeshev said. It has accumulated more than 16,000 active clients, and about 80 percent of the stocks it offers are foreign, he said.
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The demand for foreign shares runs counter to the Russian government’s party line, with Foreign Minister Sergei Lavrov warning this week that the abuse of sanctions by the U.S. will ultimately hurt the dollar’s credibility. Yet with Russian deposit rates declining, markets in turmoil with each new round of trade restrictions and the ruble sinking to a more than two-year low, more money is being sent overseas.
Russia’s RTS Index, which comprises domestic stocks but is priced in dollars, has lost 7.6 percent this year, compared with a 5.4 percent advance in the U.S. S&P 500.
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