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Russian investors report less losses than their British counterparts since start of Ukraine war, but how?

 

With Russia becoming a global pariah and getting hit with an unprecedented wave of British and international sanctions amid Moscow’s invasion of Ukraine, it stands to reason that Russian investors would be reeling at this moment. Conventional wisdom also holds that the plummeting value of Russia’s ruble currency should only exacerbate that situation.

Yet multiple surveys conducted by uk.Investing.com reveal that Russian investors are actually faring better than their British counterparts during the war in Ukraine.

In a survey of about 1,204 British respondents, 66% reported that their investments have lost value since the start of the Russia-Ukraine war, with 41% of investors seeing a 10-20% drop in their portfolio and 33% experiencing a dip of less than 10%.

A separate survey of 1,478 Russian investors, however, found that only 52% have lost money following the crash of the Russian stock market in late February — and 56% have earned on the fall of the ruble. How is this possible with the Russian economy in free fall? For starters, 55% of Russian investors hold the majority of their assets in foreign stocks and currencies and 1 in 5 only invest in Western-based stocks. With that being said, losses experienced by Russian investors have been greater than those experienced by British investors, with 43% losing more than 30% of their portfolio as opposed to just 10% of British investors experiencing the same losses.

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“While the Russian stock market plunged in value since the invasion began in late February, ironically, it is foreign investors who own the majority of shares that are available to trade on the Moscow Exchange, rather than Russian retail investors,” said Jesse Cohen, senior analyst at uk.Investing.com. 

Almost half of British investors have made changes to the portfolio during the war, including 18% who added investments in gold and 16% who added investments in oil, according to the uk.Investing.com survey. About 1 in 10 investors are seeking opportunities with Russian-based stocks that are listed on UK indexes, and more than 20% would consider buying Russian ETFs at this time. In the survey of Russian respondents, nearly 50% of investors said they are looking out for opportunities to buy shares of Russian companies at low and attractive prices. These results also align with reports that many Russians are sensing an opportunity in the stock market due to the fall of the ruble. Outside of Russia, meanwhile, investors have tried jumping on currently distressed investments as a cheap entry point into the Russian market.

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“Despite the negative impact of harsh Western sanctions on Russia’s economy, long-term buying opportunities are starting to emerge as a result of the historic collapse in stocks of leading Russian companies, most notably energy and commodity producers, such as Gazprom (MCX:GAZP), Lukoil, and Rusal,” Cohen continued.

On the other hand, Russian investors are maintaining a relatively pessimistic attitude about the stock market in their country, with 60% anticipating a complete decline as well as a long and slow recovery. Exactly how slow? Forty-five percent project a recovery for the Russian market within three to five years after the lifting of sanctions — and that is coming from investors who held a positive outlook in the previous question.

British investors are more optimistic about their stock indexes. Forty-one percent expect a decline followed by a long and slow recovery, 27% a rapid recovery followed by rapid growth, and only 2% a complete decline without a recovery within a decade.

In both the UK and Russia, the Ukraine war has only added to the perception of cryptocurrency as a risky investment. Among British investors, 58% believe cryptocurrency remains “very risky” and 9% consider it “riskier based on the conflict.” Sixty-one percent of Russian investors also feel that there are too many risks associated with cryptocurrency. That said, nearly 30% of UK investors said they could understand how cryptocurrencies might be an attractive alternative for investors in distressed markets.

“Essentially, there have always been worries that rogue states could use cryptocurrencies to evade sanctions and move billions of dollars around the world in secret,” said Cohen. “The Russia-Ukraine war has done little to change that perception.”

Ultimately, while the Russian economy will undoubtedly take a severe hit for the foreseeable future in a situation that will hurt the bottom line of the average Russian citizen, the Ukraine war has also revealed that Russian investors have thus far been better prepared than their British counterparts for disruptive markets and, thanks in large part to the diversification of their holdings, have been able to capitalize on the drop in value amid the war in Ukraine.

UK Survey Results:

This survey was conducted on March 21-23 based on polling 1,204 British adults from uk.Investing.com's user database.

1. Are you closely following the news about the Russia-Ukraine war?

  • Yes — 85%
  • No — 15%
  • 2. Are you aware of the potential impact of the war on your investments?

  • Yes — 87%
  • No — 13%
  • 3. Have your investments lost value since the Russia-Ukraine war?

  • Yes — 66%
  • No — 34%
  • 4. How much has your portfolio dropped (for those who answered “Yes” in Q.3)?

  • Less than 10% — 33%
  • 10-20% — 41%
  • 20-30% — 16%
  • 30-40% — 4%
  • 40-50% — 2%
  • More than 50% of the portfolio value — 4%
  • 5. What has happened to your portfolio since the war started (for those who answered “No” in Q.3)?

  • Saved the portfolio, but did not earn anything — 47%
  • Portfolio increased 10% in value — 38%
  • Portfolio increased 30% in value — 8%
  • Portfolio increased 50% — 7%
  • 6. Have you made any additions to your portfolio in response to the crisis in Ukraine?

  • Yes, I have invested in cryptocurrencies — 10%
  • Yes, I have invested in oil — 16%
  • Yes, I have invested in gold — 18%
  • Yes, I have invested in defense company stocks — 5%
  • Yes, I have invested in large cap tech stocks — 10%
  • None at all — 51%
  • Other — 17%
  • 7. Do you own any Russia-based stocks listed on UK stock indices or otherwise?

  • Yes, and I plan to sell them — 2%
  • Yes, and I plan to hold onto them — 9%
  • Not currently but I’m looking out for opportunities to buy them at low prices — 9%
  • No, I sold them since the crisis began — 4%
  • No, and I have no interest in owning any — 76%
  • 8. Would you consider buying Russian ETFs right now?

  • Yes, they pose a good opportunity — 5%
  • Perhaps — I will continue to follow the situation — 17%
  • Absolutely not — 78%
  • 9. Have your views on cryptocurrency’s risk level changed since the conflict?

  • No, the category is still very risky — 51%
  • No, but I understand how it is an attractive alternative for investors in distressed markets — 28%
  • Yes, I believe it is riskier based on the conflict — 7%
  • No, I was bullish on cryptocurrencies already and this validated my beliefs — 7%
  • Yes, I believe it is less risky based on the conflict — 1%
  • Yes, this conflict has shown the value of cryptocurrency — 6%
  • 10. Have you made any changes to your cryptocurrency allocation?

  • I have already bought more cryptocurrency due to the crisis — 6%
  • I have transferred all my savings to cryptocurrency due to the crisis — 1%
  • I invested in cryptocurrency earlier, I do not plan to buy more — 33%
  • I have never invested in cryptocurrency, and I do not plan to — 48%
  • I have reduced my exposure to cryptocurrency — 6%
  • I have sold all of my cryptocurrency — 6%
  • 11. What are your expectations regarding the future of UK stock indices?

  • Rapid recovery and rapid growth — 27%
  • Flat, range-bound trading for the years ahead — 30%
  • A decline followed by a long and slow recovery — 41%
  • Complete decline and the impossibility of recovery in the future 10 years — 2%
  • 12. When do you believe the Russian market will recover?

  • Within a year after the lifting of sanctions — 23%
  • Within 3-5 years after the lifting of sanctions — 29%
  • Within 5-10 years after the lifting of sanctions — 15%
  • At least 10 years are needed for its recovery —15%
  • It is unlikely that it will recover to the previous level — 18%
  • 13. Do you plan to invest in any of the following alternative investments instead of the stock market?

  • Real estate — 25%
  • Precious metals — 27%
  • Deposit accounts — 8%
  • Collectible goods — 6%
  • NFTs — 5%
  • Do not plan to invest during the crisis — 18%
  • Do not plan to invest in alternatives — 34%
  • Other — 5%
  • 14. What do you think the biggest factor for the stock market is going forward?

  • Resolution of the Russia-Ukraine War — 39%
  • Inflation — 49%
  • Continued Brexit fallout — 4%
  • Covid-19 pandemic / pandemic after-effects — 3%
  • Other — 5%
  • Russian Survey Results:

    This survey was conducted on March 16-18 based on polling 1,478 Russian adults from ru.Investing.com's user database.

    1. Have you lost money due to the crisis on the Russian stock market?

  • Yes — 52%
  • No — 48%
  • 2. What percentage of your portfolio have you lost (for those who answered “Yes” in Q.1)?

  • Lost less than 10% — 10%
  • Lost 20-30% — 24%
  • Lost 10-20% — 23%
  • Lost 30-40% — 16%
  • Lost 40-50% — 12%
  • Lost more than 50% of the portfolio — 11%
  • Lost more than 100% of the portfolio — 4%
  • 3. Describe your situation (for those who answered “No” in Q.1)

  • Kept the portfolio value, but did not earn — 60%
  • Earned 10% on the portfolio — 18%
  • Earned 30% on the portfolio — 12%
  • Earned 50% on the portfolio — 3%
  • Earned 70% on the portfolio — 2%
  • Earned more than 100% on the portfolio — 5%
  • 4. What investment strategy are you following currently?

  • Buy shares of Russian companies at an extremely low and attractive price — 46%
  • Wait and take no action until the Russian stock market begins to show growth — 19%
  • Continue to invest only in Western companies, as it did before — 20%
  • I don't have a strategy and don't understand how to act right now — 12%
  • Sell off all Russian shares, even after recording losses — 3%
  • 5. Have you earned or lost on the fall of the ruble?

  • Earned — 56%
  • Lost — 44%
  • 6. What ratio of your assets are in Russian or foreign stocks / currencies?

  • All assets in rubles and Russian stocks — 14%
  • Majority of assets in rubles and Russian stocks — 21%
  • About 50/50 — 10%
  • Majority of assets in foreign stocks and currencies — 32%
  • All assets in foreign stocks and currencies — 23%
  • 7. Do you think that cryptocurrencies are now the most protected asset?

  • No, there are still too many risks — 61%
  • No, but for Russian investors it has become an option to save part of the assets — 27%
  • Yes, it is now the most protected asset — 12%
  • 8. Are you planning to transfer some of your assets into cryptocurrencies?

  • I have never invested in cryptocurrencies and do not plan to — 67%
  • I invested in cryptocurrencies earlier, I do not plan to buy more — 21%
  • I have already transferred some assets into cryptocurrencies due to the crisis — 11%
  • I transferred all my savings into cryptocurrencies due to the crisis — 1%
  • 9. How do you feel about the idea of buying foreign currency through a crypto wallet?

  • Have never bought a currency in this way — 57%
  • Have never heard of such a possibility — 27%
  • I have bought currency in this way — 16%
  • 10. How do you feel about the restriction of trading on the Moscow stock Exchange?

  • In these circumstances, it is the right decision — 60%
  • I think that it is necessary to resume trading as soon as possible — 40%
  • 11. What are your expectations regarding the future of the Russian stock market?

  • Complete decline, long and slow recovery — 60%
  • Rapid recovery and rapid growth — 27%
  • Complete decline and impossibility of recovery in the next 10 years — 9%
  • The stock market of the Russian Federation will cease to exist — 4%
  • 12. According to your forecasts, when will the Russian market recover (responses from investors who gave a positive outlook)?

  • Within 3-5 years after the lifting of sanctions — 45%
  • Within a year after the lifting of sanctions — 38%
  • Within 5-10 years after the lifting of sanctions — 9%
  • It is unlikely that it will recover to the previous level — 5%
  • It will take at least 10 years — 3%
  • 13. What alternative instruments do you plan to invest in instead of the stock market?

  • I do not plan to invest during the crisis — 27%
  • Precious metals — 21%
  • Real estate — 20%
  • Deposit accounts — 17%
  • Other: cryptocurrency, business, commodities — 8%
  • NFTs — 6%
  • Collectible goods — 1%
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