Shares - securities put into circulation by means of issue. Provide the owner with the right to a proportional part of the dividends from the profits of the organization, give the right to participate in the management of the company, the part of the property in case of bankruptcy. Shares in the Russian Federation are registered and uncertificated securities.
The sum of the values of ordinary and preferred shares constitutes the capitalization of the company.
The share market is a financial channel for converting the savings of some market participants into investments in the business of other market participants.
In modern Russia, the stock market is going through a rather difficult stage in its history. Since 2014, the country has been under sanctions pressure, and its sources of Western financing have been blocked. World oil prices, as being of particular importance for the economy, have been declining significantly over this time, experiencing strong fluctuations, but have now stabilized at the average level.
Moscow Exchange data shows a continuous slow decline in trading volume. In particular, in 2017 the trading volume decreased by 1% compared to 2016. In 2018, the stock market increased by 17.9%, which can be considered a positive change in the previous trend.
The Russian stock market differs significantly from the developed Western markets. When analyzing the structure of financial liabilities, we can see that the share of shares and units for the U.S., German and UK economies is about 55%, and in the Russian Federation about 35%. The share of bank loans in Russia is about 30%, in Germany it is about 25%, in Great Britain it is about 20%, in the USA it is 6-8%.
It can be said that the US economy receives financing through securities, while the domestic economy is based on bank credit or loans, with an insignificant share of shares and stocks.
In the period up to 2014, the capitalization of all companies on the Moscow Exchange amounted to $811.8 billion. At the end of 2015, $394.2 billion, followed by recovery growth ($623.425 billion at the beginning of 2017). By the standards of developed economies, the market is small. Russia ranks 17th in terms of market size, followed by the Netherlands, Spain, Switzerland or Canada. The Russian market accounts for less than two percent of the US market.
The domestic market is highly concentrated. The list of TOP-10 the largest companies has not changed for the last decade. The three leaders are Gazprom, Rosneft and Sberbank of Russia, which, however, have swapped places in the list over the past four years.
The place of banks in the Russian stock market as a whole is quite significant. If we look at the TOP-100 list of the largest Russian companies in terms of capitalization, we can see that its basis is made up of the companies of the raw materials sector: oil and gas producing, oil and gas processing, mining, metallurgical and chemical - this fact reflects the general export orientation of the economy. Also represented are companies from the field of information technologies - 2, trade - 6, telecommunications, electric power - 15, mechanical engineering - 5, construction and real estate - 5, transport - 6, pharmaceuticals and medicine - 4, agro-industrial complex and food industry - 2. The number of banks and financial companies is the third after raw material enterprises and electric power industry - 10 (of them banks - 7). In terms of capitalization, banks are in second place - $101.577 billion at the end of 2017.
The largest part of this capitalization is occupied by PJSC Sberbank - $84.311 billion, or 83% of the total value of banks from the list. Next, VTB Bank PJSC received USD 10.595 billion, or 10.43% of the total value. The remaining five banks (Tinkoff Bank, Moscow Credit Bank, Rosbank, Bank Uralsib, Bank Saint-Petersburg) account for USD 6.671 billion, or 6.57% of the total value of the banks on the list, which shows the clear dominance of the two largest state banks in the market.
Thus, it can be said that the bank shares market is the most important part of the stock market. An objective assessment of the value of banking sector shares is an important task for the modern economy.