How to save and increase the company’s money in a crisis: 3 ways to use the exchange
The last few months have become very difficult for many companies, and the drop in demand has affected not only the offline business, but also representatives of other industries. It’s very difficult even to keep some stocks of money, not to mention earning extra income.
Today we will talk about how to solve these problems with the help of exchange investments.
Method # 1: placement of available funds
Let’s start with investment instruments that are as close as possible in essence to bank deposits. Today exists several ways placement of available funds using exchange instruments.
One of them is repos. In this case, funds are placed on the security of highly liquid instruments at current market rates.
REPO is a so-called repurchase transaction. It looks like this. The buyer side in the first part of the REPO (investor) buys securities in the market. In return for the securities received, the seller is given money in the first part of the repo (borrower). In fact, the seller takes a loan for a period of one day against the security of his liquid assets. For using this money, the seller pays the investor interest. The interest rate depends on the current market conditions in the money market and on the quality of securities transferred as collateral.
The client wants to place on Monday 1 million rubles for 1 day. He makes a repo transaction, for example, with shares of Sberbank at a rate of 7% per annum.
This means that on the day the transaction is completed, the client buys 6,250 shares of Sberbank, for example, at a price of 160 rubles, taking into account the discount.
Asset prices in the calculations of repos are usually slightly lower than market prices, and the difference between the market price and the price of the first part of the repos is called the discount.
On Tuesday the same day there is a sale of securities at the client at a price of 160 * (1 + 7% / 365) = 160,0306849. T.O. the client will earn 191.78 rubles.
The guarantor of the execution of the second part of the repurchase (ie the return of funds) is the central counterparty of JSC National Clearing Center, which is owned by the exchange. That is, it guarantees the execution of the transaction.
Another option is currency swap transactions. Swap transactions (SWAPs) are a combination of two reverse conversion transactions with different settlement dates (for example, first buying and then selling currency). In this case, interest income is also possible. Through ITI Capital, companies can enter into such transactions on the EUR / USD currency pair. As in the case of REPO transactions, the Central Counterparty acts as the guarantor of the second part of the transaction. As a result, a business can get
And another option for placing the company’s free funds is an investment deposit on the stock exchange. The placement period can be from a week to a year. At the same time, the possibility of early withdrawal without loss of interest earned remains.
Method # 2: low-risk investment instruments
In recent years, the stock exchange has developed investment tools that make it possible to control risks. One such tool is structural product. It allows you to make investments, not by buying assets directly, but by participating in an increase or decrease in the price of them. This means that you can earn not only during periods of growth, but also in a falling market, as it is now.
Structural products have various parameters, here are the most important of them:
- The number of assets in the product.
- Minimum investment amount – in order to buy a structural product, you always need a specific amount, a certain starting amount may be enough for one strategy and not enough for another;
- Product term – you are not just buying a product, but waiting for it to finish, in order to evaluate how the securities in its composition will behave, based on this, you will make a profit. Therefore, it is important how long the strategy is designed;
- Barrier level – Exactly how the price of the underlying asset changes affects your income. Usually this is from 50% to 75% of the price of the underlying asset.
Typically, a structured product contains 3-4 assets. That is, by investing in this product, you are betting on several securities. One of them is called the underlying asset. There are products with guaranteed income. This means that you receive income as a percentage of the invested capital, regardless of the value of the securities included in the product, during its life.
In more detail about different types of structural products we told in this article.
Method # 3: currency transactions
In ordinary life, many people buy currency from time to time, including in order to somehow protect themselves from possible economic shocks. We talked about the advantages of buying currency on the exchange at the exchange rate in this article. And not everyone knows that they can perform such operations legal entities.
Buying and selling currency on the exchange is profitable, because the transaction takes place at a real exchange price (it is at this point that the Central Bank sets official exchange rates). At the same time, broker and exchange commissions are much less than can be found in any bank – from only 0.004% to 0.1% of the transaction amount.
Of course, it is speculation on the stock exchange – an activity that is unlikely to correspond to the main business of a particular business, but just creating some currency pillow without active trading can be a good solution. At a minimum, it could help many companies if they did so at the beginning of this year.
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