Panic among wealthy Russians and business. They get rid of the rubles

 

"Threatening murmurs from the Kremlin sparked panic among wealthy Russians and businessmen. Companies allocate profits abroad, and citizens forge foreign shares in record amounts, getting rid of rubles. During 11 months, 74 billion dollars left Russia. The last time such a situation was seven years ago, when Russia occupied the Ukrainian Crimea.

The Bank of Russia announced on Thursday that in January-November 2021, net capital outflow through the private sector amounted to $ 73.9 billion. This is 1.5 times more than in the same period last year and a 7-year record, notes the portal finanz.ru.

The Kremlin's aggressive policy of supporting the Belarusian regime is increasingly worrying wealthy Russians. The flight of capital to Cyprus accelerated threefold.

Tens of billions of dollars in foreign currency flow into the Russian economy from the export of oil, gas, petroleum products and metals. And the more export revenues go to a country, the greater the outflow becomes. Almost half of the $ 73.9 billion which have left Russia are the actions of big business that withdraw money in the form of direct investments in the capital of offshore structures. The total for 12 months was around $ 30 billion, estimates Dmitry Dolgin, the ING chief economist for Russia and the CIS.

Despite the Kremlin's policy of freeing Russia's economy from tax havens, invoking patriotism and threatening criminal cases, companies from small to large continue to place their money in Cyprus and other popular jurisdictions. The structure and dynamics of capital flows indicate a low appetite for capital in the country, which, combined with external constraints, puts pressure on the ruble and keeps it undervalued, says Dolgin.

Natural persons have also joined the stream of foreign currencies leaving the federation. Stock market boom - manifested by the rapidly growing demand for foreign shares, has already taken over 20 percent. Russia's working-age population, according to the Moscow Stock Exchange.

For three quarters of 2021, the Russians invested 616 billion rubles (34.14 billion zlotys) in the purchase of foreign shares, and the accumulated amount from the beginning of 2020 is 1.09 trillion rubles. This is 12 times more than in the previous two years (90 billion rubles), but so far this trend is not in sight.

"Russian investors are actively investing in world markets and this channel of capital outflow is likely to continue," predicts Natalia Orlowa, chief economist at Alfa Bank.

Purchases of Russian stocks by private investors are also translating into an outflow of capital: Russians coming to the stock exchange de facto buy securities from non-residents, who, according to the central bank, are the main sellers for the entire year, and took $ 5 billion from the market in January-November. Foreign countries are getting rid of Russian securities.

- If we compare the outflow of private capital with the increase in the ruble supply, investors invest more than half of the funds earned in Russia in foreign assets - says Wiktor Tuniew, managing director of Agidel Management Company.

The example comes from above. The Kremlin converts every tenth ruble of budget revenues into foreign currency and gold collected in the National Welfare Fund.

In the years 2022-24, another 112 billion dollars is to be allocated to the funds."

Situation around Ukraine may be more important to these events than Belarus.