CC BY
56
Экономические науки
УДК 336.76
THE GLOBAL FINANCIAL MARKET: THE ANALYSIS OF CURRENT
FINANCIAL EVENTS
А-R. Mzokov, Moscow State University (Moscow, Russia), e-mail: azamat. mzokov. [email protected].
Abstract. In the modern world the financial market plays an extremely significant role. It is the place where two parties meet together - one that has an excess capital and the other, which is suffering from the lack of free cash. With the help of this intermediary, that is truly the financial market, both sides are satisfied as banks and other financial institutes get interest on the amount of money they lend and corporations receive so needed money to launch new products and realize innovative projects. That is why its condition has a serious influence on other spheres that can sometimes even lead to deep crisis in the country. In this article the author analyses one of the most impressing financial events in the world financial market that took place during the first two quarters of 2017.
Keywords: financial market, finance, financial institute, financial instrument, Central bank, bond, financial event, money laundering, key interest rate.
МИРОВОЙ ФИНАНСОВЫЙ РЫНОК: АНАЛИЗ ТЕКУЩИХ ФИНАНСОВЫХ СОБЫТИЙ
Аннотация. В условиях современного мира финансовый рынок играет чрезвычайно важную роль. Он представляет собой место, где встречаются различные участники финансового рынка, одни из которых обладают излишним капиталом, а другие так в нем нуждаются. С помощью этого посредника (финансового рынка) обе стороны достигают своей цели, банки и другие финансовые институты получают проценты по выданным кредитам, а корпорации получают столь необходимые им денежные средства для запуска новых продуктов и реализации инновационных проектов. Именно поэтому состояние финансового рынка в значительной степени влияет на другие сферы, и иногда даже приводит к глубокому кризису внутри государства. В данной статье автор анализирует одни из наиболее значимых событий на мировом финансовом рынке, имевших место на протяжении первых двух кварталов 2017 года.
Ключевые слова: финансовый рынок, финансы, финансовый институт, центральный банк, облигация, финансовое событие, отмывание денег, ключевая процентная ставка.
The Global Financial Market: the analysis of current financial events
The Global Laundromat
On the 20th of march 2017 the Guardian, a prominent newspaper, issued an article, demonstrating the detailed scheme of Russian money laundering during 2010-2014. In this operation billions of dollars were moved out of Russia with British-registered companies. The documents processed by The Guardian show that approximately $20bn were laundered in four-year period but some investigators state that the sum could even reach $80 bn. The Organized Crime and Corruption Reporting Project (OCCRP) obtained these materials and shared them with the media partners
from 32 countries including the mentioned publisher. The Global Laundromat banking records have the details about 70,000 banking transactions (1,920 that went through UK banks and 373 via US banks) [1].
The scheme that allowed to transfer money from east to west was unraveled by policemen and at first reported by OCCRP which called this operation as "The Russian Laundromat". The last one imposes that two companies in Moldova pretend to lend money one another, underwritten by Russian businesses. After that one of them would "default" on the loan, the Moldovan judges then certify the "debt" as authentic and oblige the Russian firms to send cash to accounts in the country. Later it went from Moldova to Latvia, inside the European Union. As a rule, the transferred money was used to buy diamonds from a jewelers in Bond Street, furs from brokers in London, and chandeliers from a Chelsea boutique [2].
The UK and US high street banks were also engaged into this fraud scheme, having processed nearly $800m ($740m in the UK and $63.7m in the US) from a vast money-laundering operation. Among them stand suchworld famous banks as HSBC (processed about $545.3m), Royal Bank of Scotland ($113.1m), Coutts ($32.8m), Standard Chartered ($28.6m), UBS ($7.8m), Citibank ($2.8m), Barclays ($2.5m), ING ($2.4m) [1].
0 ilOOm 200 m 300m 400m 500m
1 I I I I I
HSBC S545.3m
RBS S1111m
Standard Chartered 8.6m
UBS £7.8 m
I
Citibank S2.3m
I
Barclays $2.5 m
I
ING $2.4m
I
Picture 1. British high street banks with more than $2m worth of transactions [1].
"National" FLBs
Now there is a broad discussion about the attractiveness of new «national» FLBs (federal loan bonds) in Russia. The first issue of these securities is planned for the middle of April. FLB is a kind of debt financial instrument which gives its owner an opportunity to get coupon payments during the period till the moment of bond redemption and at the end to return invested money. Under the coupon payments we mean percent on your capital like it is in banks when you open a deposit. As for these «national» bonds, they are rather low-risk because of underwriting by our government, namely by the Ministry of Finance (MOF).
MOF is going to issue "national" FLBs at a price of 100%, maturing in three years with changing coupon and payments every six months. That means that percent on them will be different dur-
ing the period and dependent on the market conjuncture. However, it is declared FLB having an average 8,5% coupon and risk premium on traditional federal loan bonds, which can be sold on the financial market, equal to 0,5% [3].
Банковский депозит
ОФЗ-н
Сумма инвестиций - 30 ООО руб.
- срок депозита - 1 год - процентная ставка по депозиту -6,7% годовых - периодичность выплаты процентов-6 мес - срок облигации - 3 года - номинал - 1 ООО руб. - купон - 7,5-10,41 % годовых - периодичность выплаты купонного дохода-6 мес - цена покупки - 100% - комиссия: при покупке - 1,5% при предъявлении к выкупу - дополнительно 1,5%
через 1 год через 3 года
Вкладчик получит 32 010 руб., в т.ч.: - проценты -2 010 руб. - сумма вложений - 30 ООО руб. Комиссия - 0 руб. Владелец получит 32 250 руб, в т.ч.: - купонный доход - 2 250 руб. - сумма вложений - 30 ООО руб Комиссия2 - 900 руб. Владелец получит 38 069 руб , в т.ч : - купонный доход за 6 купонных периодов- 8 069 руб. - сумма от погашения облигации по номиналу - 30 000 руб. Комиссия -450 руб
Доходность инвестирования с учетом уплаты комиссии
Picture 2. Investment in banking deposit vs investment in FLBs [5].
Established limits refer to the amountof money (minimal and maximal) that must be paid by investors to purchase these securities. So having 1 000 rubbles as nominal price of a bond you need to buy from 30 to 15 000 FLBs, therefore the investment corridor fluctuates from 30 000 to 15 000 000 rubles. Annually Ministry of finance is planning to emit ''national'' bonds to the sum of 30bn rubbles [4].
The MOF has also informed that the role of bookrunners will perform the Russian leading banks: Sberbank and VTB24. They will charge a commission, amounting to 1,5-0,5% in dependence on the size of investments, which obviously ''eat'' all the risk premium (0,5%) [5].
Russian Central Bank and FED interest rates
The Federal Reserve system (FED), the American Central Bank, raised its key interest rates by 0,25 percentage point to a range of 0,75-1%. It is the third interest rate hike since the financial crises in 2008 and the second one during the last three months [6].
By the way, key interest rate (refinancing rate or federal funds rate) is an interest rate at which USA banks credit each other. It is an important indicator because it influencesthe interest on a loan for an end-user. The Federal Reserve System is not able to establish a refinancing rate but sets a target interest rate which represents the range of values (for example, as now - 0,75-1%). The FED affects its level by purchasing or selling government bonds, increasing or reducing the money supply, and in result corrects the range [7].
Picture 3. Monthly federal funds effective rate, % Source: [6]
A rate rise symbolizes that U. S. economy is in good shape and no longer needs to be encouraged like it was in December 2008 when the key interest rate was placed at 0% in try to resuscitate the crashed housing market. The indicators showing this boost include adding more than 200 000 jobs in February and unemployment rate falling every year since 2010, amounting in 2017 - 4,7%. The stock markets have also demonstrated a moveas Dow Jones and S&P 500 have been raising since the financial crisis [8].
12%
10%
'90 '91 ■92 '93 '94 '95 '96 '97 '98 '99 'OO '01 '02 'ОЗ '04 'OS 'Об '07 '08 '09 'lO '11 '12 '13 '14 '15 '16
Picture 4. Unemployment rate in the United States from 1990 to 2016.
Source: https://www.statista.com/statistics/193290/unemployment-rate-in-the-usa-since-
1990/
Fed Chair Janet Yellen and other Fed leaders are planning to increase rates two more times in 2017 because of increasing inflation risk (Consumer Price Index for all items increased 0,1 percent in February and over the last 12 months rose 2.7 percent before seasonal adjustment [9]) but their future decision directly depends on the state of the economy.
Obviously, these actions of Federal Reserve System will trigger higher borrowing costs on credit cards, car loans and mortgages but set the goal to prevent American economy from overheating that is one of the most undesirable problems for every country.
Unlike the FED Russian Central Bank (CB)has lowered the key interest rate, which is the main indicator of monetary policy in Russia. Simply, it is the interest on the loan taken by commercial banks from our Central Bank.
On the 24th of April of 2017 the CB Board of Directors made a decision to decrease the key interest rate by 0,25 percentage point to 9,75%. It is the first time when the indicator is changed for the last 6 months [10]. The Board of Directors points out that inflation is decelerating quicker than it has been forecast, while inflationary expectations reduceand economic activity resumes.
Picture 5. The change in the Russian Central Banks' key interest rate from 2014 to 2017 Source: http://www.rbc.ru/finances/24/03/2017/58d4e26c9a7947bbfbdedd94
In the press release it is mentioned that during the first twenty days of march an annual growth rate of consumer prices declined to 4,3% from 5% in January 2017. In order to maintain the tendency to savings and sustainable decrease of inflation there is a need for moderately stringent credit conditions. It is estimated that gross national product is raising since the second quarter of 2016 and the positive trend will continue in the future. 1-1,5% growth of GNP is expected at the end of 2017 and 1—2%in 2018-2019 [11].
The Central Bank will assess the future changes of inflation rates and our economy concerning the forecast and it assumes the possible rise of key interest rate during the second or third quarter of 2017. The next meeting of the CB Board of Directors, considering the interest rate level, is scheduled for the 28th of April of 2017.
Литература:
1. Harding L., Hopkins N., Barr C. British banks handled vast sums of laundered Russian money // The Guardian. 2017. March 20. URL: https://www.theguardian.com/world/2017/mar/20/british-banks-handled-vast-sums-of-laundered-russian-money.
2. Ткачёв И., Макаренко Г., Фейнберг Г.А., Макаров О., Криворотова А. Молдавская прачечная: как из России выводили $20 млрд // РБК. 2017. 21 марта. URL: http://www.rbc. ru/finances/21 /03/2017/58d 11 ee39a79472280f0c9ee?from=subject.
3. Коваль Л., Орлов И. Покупателям «народных» ОФЗ придется оплатить услуги Сбербанка и «ВТБ 24» // Ведомости. 2017. 22 марта. URL: http://www.vedomosti.ru/finance/articles/2017/03/22/682277-pokupatelyam-ofz.
4. Воздвиженская А. Минфин ждет инвестора // Российская газета. 2017. 30 марта. URL: https://rg.ru/2017/03/30/v-aprele-mozhno-budet-kupit-pervye-narodnye-obligacii.html.
5. Облигации федерального займа для населения (ОФЗ-н) - новый инструмент для сбережений россиян : презентация // Министерство финансов Российской Федерации. 2017. 15 с. URL: http://minfin.ru/common/upload/library/2017/03/main/2017.03.23_Prezentatsiya_OFZ-n.pdf
6. Inman P., Thielman S. US Federal Reserve raises interest rates to 1% in bid to hold off inflation // The Guardian. 2017. March 15. URL: https://www.theguardian.com/business/2017/mar/15/us-federal-reserve-raises-interest-rates-to-1
7. Ставка ФРС, и почему она волнует рынок. Вопросы и ответы // ТАСС. 2016. 27 июля. URL: http://tass.ru/ekonomika/3487859.
8. Gillespie P. Fed raises rates, signals more to come in 2017 // CNNMoney. 2017. March 15. URL: http://money.cnn.com/2017/03/15/news/economy/fed-march-meeting/index.html
9. Consumer Price Index - February 2017 : news release // U. S. Department of Labor, Bureau of Labor Statistics. 2017. 8 p. URL: https://www.bls.gov/news.release/pdf/cpi.pdf.
10. ЦБ снизил ключевую ставку до 9,75% годовых // РИА Новости. 2017. 24 марта. URL: https://ria.ru/economy/20170324/1490741625.html
11. Банк России принял решение снизить ключевую ставку до 9,75% годовых : пресс-релиз // Центральный банк Российской Федерации. 2017. 24 марта. URL: http://www.cbr.ru/press/PR.aspx?file=24032017_132958keyrate2017-03-24T13_25_44.htm
References:
1. Harding L., Hopkins N., Barr C. British banks handled vast sums of laundered Russian money // The Guardian. 2017. March 20. URL: https://www.theguardian.com/world/2017/mar/20/british-banks-handled-vast-sums-of-laundered-russian-money.
2. Tkachjov I., Makarenko G., Fejnberg G.A., Makarov O., Krivorotova A. Moldavskaja prachechnaja: kak iz Rossii vyvodili $20 mlrd // RBK. 2017. 21 marta. URL: http://www.rbc. ru/finances/21 /03/2017/58d 11 ee39a79472280f0c9ee?from=subject.
3. Koval' L., Orlov I. Pokupateljam «narodnyh» OFZ pridetsja oplatit' uslugi Sberbanka i «VTB 24» // Vedomosti. 2017. 22 marta. URL: http://www.vedomosti.ru/finance/articles/2017/03/22/682277-pokupatelyam-ofz.
4. Vozdvizhenskaja A. Minfin zhdet investora // Rossijskaja gazeta. 2017. 30 marta. URL: https://rg.ru/2017/03/30/v-aprele-mozhno-budet-kupit-pervye-narodnye-obligacii.html.
5. Obligacii federal'nogo zajma dlja naselenija (OFZ-n) - novyj instrument dlja sberezhenij rossijan : prezentacija // Ministerstvo finansov Rossijskoj Federacii. 2017. 15 s. URL: http://minfin.ru/common/upload/library/2017/03/main/2017.03.23_Prezentatsiya_OFZ-n.pdf
6. Inman P., Thielman S. US Federal Reserve raises interest rates to 1% in bid to hold off inflation // The Guardian. 2017. March 15. URL: https://www.theguardian.com/business/2017/mar/15/us-federal-reserve-raises-interest-rates-to-1
7. Stavka FRS, i pochemu ona volnuet rynok. Voprosy i otvety // TASS. 2016. 27 iju-lja. URL: http://tass.ru/ekonomika/3487859.
8. Gillespie P. Fed raises rates, signals more to come in 2017 // CNNMoney. 2017. March 15. URL: http://money.cnn.com/2017/03/15/news/economy/fed-march-meeting/index.html
9. Consumer Price Index - February 2017 : news release // U. S. Department of Labor, Bureau of Labor Statistics. 2017. 8 p. URL: https://www.bls.gov/news.release/pdf/cpi.pdf.
10. CB snizil kljuchevuju stavku do 9,75% godovyh // RIA Novosti. 2017. 24 marta. URL: https://ria.ru/economy/20170324/1490741625.html
11. Bank Rossii prinjal reshenie snizit' kljuchevuju stavku do 9,75% godovyh : press-reliz // Central'nyj bank Rossijskoj Federacii. 2017. 24 marta. URL:
http://www.cbr.ru/press/PR.aspx?file=24032017_132958keyrate2017-03-24T13_25_44.htm
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About the author
Azamat Ruslanovich Mzokov, a second-year student of School of Public Administration, Lomonosov Moscow State University (Moscow, Russia).
