This forecast is given in a review by Moody’s Vice President Svetlana Pavlova, who says that a decrease in interest rates will prompt depositors to increasingly opt against bank deposits and search for higher yield in shares and bonds, TASS news agency reports.

As of February 2017, securities made up approximately 16% of individual savings, the highest level since 2009, TASS reports citing data from the Federal State Statistics Service. Russians invested RUB 3.2 billion in open-ended mutual funds in January, a record high since January 2008 (according to data from the National League of Managers).

“The securities market in Russia continues to make up a small percentage of GDP, but we expect that growth in business on this market will accelerate over the next 12-18 months despite the complex operating conditions in Russia and the uncertainty associated with changes in regulation”, Pavlova said.

Moody’s provides ratings for four investment companies working on the Russian market: LLC Aton, PJSC IC RUSS-INVEST, Reserve Invest Cyprus, and Omega Funds Investment (Cyprus). Aton is in the best position of these companies: the company is one of the ten largest managers of individual assets and its main sources of revenue include brokerage commissions and asset management commissions, while revenue from servicing individual accounts, including the accounts of wealthy clients, accounts for 50% of revenue.

TASS notes that Russian investment companies that specialize in work with individuals in Russia – BKS and Finam – also benefit from the lower interest rates in Russia, but they face the risk of the Bank of Russia tightening regulation of the rules for working with individuals.

Tax incentive measures adopted in Russia are also prompting retail investors to shift to the securities market. Such measures include tax breaks on profit from securities transactions and a tax deduction for owners of individual investment accounts that are provided under the stipulation that the money or securities must remain in the account for at least three years.

In addition, recent proposals to exclude interest income on rouble-denominated bonds issued from 2017 to 2020 from the taxable base of individual income tax should also increase retail clients’ confidence in investment in securities, Moody’s concludes.