Falling yields reduced individuals' investments in bonds and bonds

2024-08-31 09:42:00, Kosova & Bota CNA

Falling yields reduced individuals' investments in bonds and bonds

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Individuals' investments in bond and bond auctions have continued to decline in the first half of this year.

The data of the Financial Supervision Authority (AMF) show that in the 6th month of 2024, individuals invested 18.3 billion ALL in the primary market of bonds and bonds, with a decrease of 17.9% compared to the first half of last year.

A decrease was also noted in the number of transactions, which decreased to 6347, with an annual decrease of 22.8%. According to the type of financial instruments, the decline has been extended simultaneously to both bonds and bonds.

AMF figures show that the value of bond purchases in the primary market decreased to ALL 14.68 billion, with an annual decrease of 12.3%. Meanwhile, investment in bonds reached 3.62 billion ALL, 34.8% less compared to the first 6 months of 2023.

The above data refer to transactions carried out through financial intermediaries licensed by the AMF, mainly commercial banks.

However, investing in treasury bonds can also be done through special counters of the Bank of Albania.

The decrease in the investment of individuals in bonds and bonds is estimated to have come mainly as a result of the further decrease in yields.

During the first half of this year, treasury bond yields have been at levels very close to the base interest rate, and even the 3-month and 6-month instruments have gone below the base rate.

Such a situation has reduced the interest of individuals to invest in the primary market.

However, what is noticeable this year is the increase in investments by individuals in the secondary market. According to AMF statistics, individuals bought approximately ALL 3.1 billion securities from bank portfolios.

The shift of individuals' interest from the primary to the secondary market seems to be explained by the better returns offered by instruments issued by the government in previous years, especially during 2022.

Falling yields have made these instruments more attractive and increased individuals' investments in them.

This shows a better knowledge of the mechanisms and alternatives that the financial market offers, although the number of investors who made investments in the secondary market is relatively small, with 909 transactions in total.

In general, yields on government debt instruments have remained low throughout 2023 and the first half of this year.

A slight and temporary rise was observed in bond yields only in the last months of 2023, but staying away from the levels reached in 2022.

In the first half of this year, the yields moved down again./ Monitor