Capital investments at the threshold // Small business and the state are testing the investment climate

Investment activity of small and medium-sized enterprises (SMEs) rose to record levels in May on the back of a recovery in sales and available loans, follows from the business sentiment index RSBI. In the coming months, the investment potential of companies will depend on the passage of the third wave of COVID-19, and the increase in the cost of debt financing will also hinder investments in development. Big business, less sensitive to coronavirus restrictions, may, on the contrary, move from an investment pause to an increase in capex – as soon as the government infrastructure to support investments is ready.

The investment activity of small and medium-sized businesses in May reached record levels, according to the new measurement of the RSBI index (since 2014, the study of SME business sentiments has been carried out by Opora Rossii, PSB Bank and Magram Market Research agency). Thus, the investment component increased from 55.9 points in April to 59.2 points in May – these indicators, along with improved sales and the decision of companies to expand their staff, provided the maximum value of business activity for the entire observation period (54.6 points against 52.6 point in April). “In May, small and medium-sized businesses demonstrated record high business activity, which is primarily due to high investment dynamics, which was shown by all business segments and all spheres of activity. For the first time since the beginning of the pandemic, micro and small businesses have begun to actively invest in business development, ”says PSB Vice President Kirill Tikhonov.

A poll of 1.8 thousand companies showed that 20% of respondents increased their investments in May against 15% in April, while 8% of respondents reduced their investments against 13% earlier. Recall that the Central Bank’s data on lending to small businesses in recent months indicated a reversal of SMEs from lending to meet the needs due to COVID-19 to loans for investment purposes (see Kommersant on May 24). An increase in investment activity in the sector was facilitated by sales growth – for example, a fifth of companies noted an increase in revenue in May (plus 3 pp), a decline was reported by 36% (minus 8 pp). According to the authors of the study, positive business expectations regarding future sales (36% of companies expect revenue growth) will contribute to the expansion of investments in the coming months. Plans to increase investments were announced by 30% of companies against 26% in April, while the share of those who will cut costs remained unchanged – 5%.

However, the ability of companies to invest will depend on the conditions for the passage of the third wave of COVID-19, including the severity of restrictive measures. The potential of debt financing for small companies has largely been exhausted: as the head of Opora Rossii, Alexander Kalinin, explained earlier to Kommersant, after the key rate increase, the effect of concessional lending programs has been leveled. “Given that the situation with the spread of COVID-19 is worsening, it is necessary to take measures to maintain the growth in small business activity that we see now. We have already proposed to the government to create a preferential mortgage for the purchase of industrial premises at a rate of 2-3% for a period of 10-15 years, ”the expert noted. According to Kirill Tikhonov, the partial restrictions of June will generally have little effect on entrepreneurs, since most of them have already adapted to the coronavirus business environment.

Big business will be even less affected by the restrictions of the new wave, and the potential for expanding capex will depend on the success of the White House in creating investment infrastructure. In conversations with Kommersant, experts noted the investment pause of business in anticipation of fine-tuning the mechanism of agreements on protection and promotion of capital investments (SZPK), counting on additional guarantees and flexibility in working with the tool (see Kommersant dated June 16). Economists from the HSE Development Center in the latest issue of comments on the state and business note that, despite the objective prerequisites, there are no signs of acceleration of investment dynamics in accordance with the White House plans (5.4% average annual investment growth). So, in the first quarter of 2021, Rosstat records an increase in investment by the same period of 2020 at 2% and 2019 at 4.8%. At the same time, the share of budgetary funds and extra-budgetary funds has noticeably increased in the financing of investment activity – 1.8 pp year-on-year, according to HSE experts. Earlier, ING economists also noted that with the growth of corporate lending and profits in the economy, capital investments grew against the background of expanding financing of budget projects (see Kommersant of June 10).

Diana Galieva

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