President Vladimir Putin said there should be no restrictions on Russians investing in initial public offerings as the government seeks a record $10 billion from state asset sales this year.
About 1 percent of Russia’s 143 million population participate in the financial market, while pension fund investments account for around 4.5 percent of the nation’s gross domestic product, Putin said at his residence in Novo-Ogarevo, according to a transcript on the Kremlin website today.
“We need to support the domestic investor,” Putin told government officials. “For many Russian investors, including the Pension Fund, there currently exist limits on IPO participation. In this context, I suggest discussing removing these limits.”
Private pension funds face tight limits on the stocks they can invest in as well as the period in which they must deliver a positive return. About 80 percent of Russia’s pension money is managed by the state-run development bank, Vnesheconombank, which avoids equity investments. The government will push ahead with record sales this year as it seeks to stem capital flight and reverse the state’s creeping hold over the economy, First Deputy Prime Minister Igor Shuvalov said last week.
State-owned companies, including tanker owner OAO Sovcomflot and VTB Group, Russia’s second-biggest bank, are among those that may see stakes sold by state this year, Russian Prime Minister Dmitry Medvedev said in a Bloomberg Television interview on Jan. 23.
The stake sales should happen mainly on Russian exchanges, Putin said.
“Privatization should help develop and increase the capitalization of our own financial market instead of developing foreign financial platforms,” he said.
Putin backed plans to create a so-called market mega- regulator as the government seeks to merge the Federal Financial Markets Service with the central bank. Russia may start combining Bank Rossii’s functions and the markets watchdog this year, Shuvalov told the meeting, according to the transcript.
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