Recently there was a statement from the government of the Russian Federation in which in order to maintain and stabilize the economic situation it is going to allocate 1 trillion rubles from the national welfare fund and put them on the stock exchange. Will this action have any positive effect? How much is one trillion rubles? Is it a lot or a little?
Where exactly will the money be invested?
The main thing is to understand that one cannot just “put money on the stock exchange. It can be invested in specific securities and https://telegram-store.com/catalog/product-category/channels/business. In the case of such a big infusion of money, it is worthwhile to understand where this money will go.
This operation is designed to stabilize the macroeconomics of the country; therefore it is silly to expect “support” for small businesses by buying their shares. Here the government has a different goal – to make a FAST profit and create a pleasant economic atmosphere. Therefore, most likely the investments will be either in large exporting companies, which still remain on the market or were originally here or in the state banks.
An example of such companies is Gazprom, Rostelecom and the like. But why them? Only such large corporations will be able to “pay off” foreign debts and other expenses through dividends.
Free float and total market capitalization
Not all companies put their securities on the market. There are some that do not “rotate on the stock exchange,” but hold a controlling stake.
Free float is just an example of the remaining securities, which constantly remain on the market and from time to time pass from one person to another. That is, securities in free float.
All shares of stock may become such, except:
- shares held by investors holding more than 5% of the total number of shares in the company.
- shares of restricted stock (e.g., employees).
- shares of insiders.
Calculations
Now it’s worth estimating how 1 trillion rubles will affect the market. To do this, we must first estimate the entire capitalization of Russian companies on the Moscow Exchange.
The first is the “net capitalization”. It is about 42 trillion rubles, so 1 trillion is about 2.5%, which is not much.
However, this data excludes Free Float. On average, for Russian companies, this figure ranges from 23 to 30%, but for the sake of reliability, it is necessary to take the maximum – 30%. Then we get that the amount is already equal to approximately 13 trillion rubles, which is already 7.7%, and this is a more impressive figure.
Prior to February 24, the share of non-residents in the trade turnover reached 70%-80%. This is about Br8.5 trillion in circulation, where Br1 trillion is 12%, which is already a large amount. However, one should consider the probability that this money will be withdrawn after the purchase of documents.
How will this affect the quotes?
Now the most important question. It is already clear that there is about 12% of Free Float left in reserve, which could seriously support the economy. However, more and more people are afraid of ruble devaluation and how to behave in this case and what to do? There are several ways to save money:
- Buy a dollar or other stable currency. It is not so expensive at the moment and there are legal channels for buying it now.
- Buy gold or other precious metals. There are no restrictions on them now and there is a temporary “disabling” of VAT.
- Transfer money into cryptocurrency. Probably the riskiest option, because you need to be well versed in this industry.
- Get involved in investing in large Russian companies, which in any case will bring income.
Now you have to take into account that everyone who has already entered the market, most likely they will stay in it. Moreover, they are unlikely to sell shares, because now it is important to receive dividends from what is still left.
