Translated material
The first month is lumpy
All bank deposits turned out to be unprofitable in January
The traditionally high January inflation, which this year amounted to 1.7%, became the reason that deposits denominated in both rubles and foreign currencies turned out to be unprofitable. Due to the fall in global oil prices, mutual funds also performed poorly. Such data was published yesterday by the Center for Macroeconomic Research (CMER) of the BDO Unicon company. According to market participants, there is no cause for concern yet, because inflation is seasonal, and the oil recession is already behind us. However, this year promises high volatility in stocks, with the largest gains likely to be shown by industry funds in the energy and telecommunications sectors.According to the CMEI report, the least unprofitable at the end of January were dollar deposits: depending on the investment period, their purchasing power decreased by 0.36-0.62%, depending on the investment period. This is explained by the strengthening of the nominal exchange rate of the dollar against the ruble: in January, the American currency rose in price by 10 kopecks. -- from 26.44 to 26.53 rubles. for a dollar. Deposits in euros depreciated much more - by 2.02-2.27%, since the euro/ruble exchange rate decreased by 10 kopecks over the month. -- from 34.48 to 34.38 rub. Ruble deposits fell in price by 0.88%. Owners of cash savings in foreign currency found themselves in the worst position - dollars fell in price by 0.92% in January, and the euro by 2.54%.
Only deposits in rubles opened a year ago were able to protect the population’s savings from depreciation. Their value increased by 1.13%, while annual deposits in euros and dollars depreciated by 0.78 and 7.12%, respectively.
“There is nothing surprising about high inflation in January,” says Dmitry Orlov, head of the department of marketing and banking products of the Russian Development Bank. -- This is a consequence of uneven price changes, for example, of a seasonal nature. A similar situation developed in previous years. For example, in 2006, according to Rosstat, in January inflation was 2.4%, but at the end of the year it was only 9%, i.e. the growth was uneven from month to month.”
Despite the low return on deposits, credit institutions do not seem to be planning to increase interest rates. “With the current refinancing rate of 10.5%, raising rates is not entirely correct,” notes Mr. Orlov. -- Long-term deposits in many banks in terms of interest rates exceed refinancing rates, and short-term resources are not of interest to all banks. In addition, banks already offer high rates during their special promotions.” The banker points out that clients understand the savings function of deposits, and therefore there is a trend towards an increase in the share of savings in rubles and a decrease in dollars.
According to BDO Unicon, the real ruble return on real estate investments also decreased by 0.68%, since prices for residential real estate in Moscow practically did not increase in January. However, citizens who bought an apartment a year ago did not make a mistake, since the real ruble return on their investments was 57.7% per annum. In addition, thanks to rising gold prices, impersonal metal accounts showed a positive real ruble yield of about 1.04%.
“Due to the January correction in the stock market, open-end mutual funds of shares and mixed investments did not show the best results,” the authors of the study say. “This situation is associated with a fall in the value of shares of oil companies, which are present in the portfolios of many funds.”
However, shares of some other sectors (for example, electric utilities) rose. As a result, the boundaries of real ruble returns for mutual funds in January ranged from minus 5.92% to plus 3.77% for mixed investment funds, from minus 8.88% to plus 10.56% for stock funds, from minus 2.42% up to plus 2.58% for bond funds. “Given the market conditions in January, the results shown by mutual funds are quite normal,” says Anton Kuzin, an expert analyst at the National League of Managers. “After the decline in the oil sector, securities of banks, telecoms, and electric power companies traded well.” Now the market is in very good condition, he believes, oil prices have risen to almost $60 per barrel, while the oil sector on the market has not yet recovered this increase. According to Mr. Kuzin, equity funds will now be most profitable for investors.
In general, this year, according to Elena Guseva, an analyst at Investcapital Management Company, the Russian stock market will show high volatility due to unstable prices for oil and metals, as well as due to the expected slowdown in global economic growth. Therefore, the most successful may be mixed funds whose strategy is moderately aggressive. “Among equity funds, industry funds in the energy and telecommunications sectors can show the greatest gains,” notes Ms. Guseva. -- Electric power industry is one of the basic promising sectors of the domestic economy. Telecommunications companies are steadily improving the quality and financial performance of their activities. In addition, one of the most promising sectors in 2007 will be banking - in connection with the admission of foreign investors to the purchase of banking shares and the planned placements of the largest Russian banks. The dynamics of the oil sector will depend on world oil prices and is currently characterized by increased investment risks, but in the medium term it has great growth potential.”