President Vladimir Putin’s call for privatizations to be focused on the Moscow bourse may have the unwanted effect of draining demand from a planned $2 billion stock offering by banking group .
Analysts warned on Monday that the Moscow stock exchange is too small to supply all the capital being sought by VTB and a series of state-owned companies, which could depress the price of the shares they aim to sell.
And a shortage of local demand could also undermine Putin’s desire to use the planned share offerings to boost Moscow’s status as a financial hub.
Seeking to transform Moscow into a global financial center rivaling New York, London and Hong Kong, Putin last week called for all state share sales to be held in Russia.
Recently, Russia merged its two stock exchanges into the united Moscow Exchange in a step to ease domestic share issues. The exchange plans an initial public offering on its own platform later this year.
But trading volumes in Moscow remain small by comparison with New York or London — the main listing platforms in recent years for Russian companies — as it has yet to create a competitive infrastructure and gain the trust of investors.
According to brokerage , only 1.5 million people in Russia are direct or indirect stock market investors, compared with more than half of households in the United States.
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