The Bank of Russia has published preliminary data of the balance of payments for seven months of 2016. According to the regulator, the outflow of capital from the country continues to remain low: in comparison with January—July 2015 net capital exports by the private sector fell by almost five times and amounted to $10.9 billion At the same time, as noted in the message of the Central Bank, while last year the outflow of capital was affected by the decline in demand of Russian companies for foreign assets, but now the demand for them grows. In the first quarter of 2016, the Central Bank recorded a decrease in the demand for foreign financial assets by $2.5 billion, while in the second quarter of 2016, this figure rose to $3.8 billion.
The decrease in capital outflows also affected the decline in external debt payments, indicates the chief economist of “Renaissance capital” Oleg Kuzmin. According to him, if in 2015, companies and banks had to pay about $67 billion of short-term and long-term debt in 2016, this amount had dropped to $40 billion Also in this year fell significantly the demand for currency. “Incomes are not growing in the first half of the growth rate of wages in Russia have been negative,” — said the expert. He also believes that the outflow of capital could decline due to large private investors who preferred to keep their savings in foreign banks. “Paradoxically, it helped us sanctions. After their introduction, the geopolitical risks for the Russian business has increased, and many wealthy people were afraid to place money in Switzerland or the UK,” — said Kuzmin.
In July, net capital outflow from the private sector amounted to only $400 million Is a slight increase, given that in July—August the company and the banks paid dividends to shareholders, — says the analyst of Raiffeisenbank Denis Poryvai. If these funds were converted in the currency, the outflow of capital would be much greater, and so it turns out that they were invested in Russian assets.” The analyst notes that the inflow of funds from investors helped to strengthen the Russian ruble. Since June the dollar on the Moscow stock exchange fell by 2.5–3 rubles.
Low levels of capital outflow from the country is supported by the activity of foreign investors, who are willing to buy Russian securities. “Russian bonds weight in gold”, — quotes the words of a Fund Manager Dynamic Bond London Ariel Bezalel Bloomberg. The Fund Manager with assets of $7 billion lamented that he several times failed to increase the investment portfolio due to securities of certain Russian issuers they are simply not there in the market.
The rising cost and falling profitability has not deterred investors, which in July invested $14 billion in bond funds for developing countries, which was a record inflow for the month, according to EPFR Global.
According to the Central Bank, in July, foreigners owned almost a quarter of the OFZ market is 24.5%. Foreign investors are returning to the Russian market of public debt, increasing their share in ruble-denominated government securities with a maximum of three years rate — in March 2015, their market share was only 17.9 percent.
Experts also note that the outflow of capital had a positive impact and reducing the volume of illegal export of funds from the country. “This contributes to the Central Bank’s policy on clearing the banking sector,” — says Oleg Kuzmin. According to him, indicated by the article in the balance of payments of the Central Bank: “Net errors and omissions”. The volume of export of funds under this article in April—June amounted to $700 million versus $3.5 billion in the first quarter of 2016.
In the baseline scenario of the Bank of Russia with the price of oil at $38 a barrel, the outflow of capital in 2016 will be about $25 billion against $63 billion in 2015.