MOSCOW, Oct 29 (Reuters) - The Russian government has

allowed state companies such as nuclear monopoly Rosatom or

Russian Railways to buy shares and bonds on the market with

their surplus cash, in a move seen as boosting the stock market

following the latest round of U.S. sanctions.

Russia's MOEX stock market index is down 12.5% in 2025,

according to data from the exchange, due to high interest rates,

which increase the appeal of bank deposits, as well as pressure

from Western trade measures.

"The implementation of the resolution will increase the

involvement of state-owned companies and state corporations in

investing in the Russian stock market," the Finance Ministry

said in a statement.

RETAIL INVESTORS DOMINATE MARKET

Since an exodus of foreign investors after Russia launched

what it calls its "special military operation" in Ukraine, the

Russian stock market has been dominated by retail investors,

while the Moscow Stock Exchange is the subject of Western

sanctions.

President Vladimir Putin ordered authorities to raise the

capitalisation of the stock market to 66% of gross domestic

product (GDP), from 27%, in 2024 but companies have been

reluctant to place shares, arguing that the market is too

shallow.

The stock market index rose by 1.2% on Wednesday, data on

the exchange's website showed, and analysts said the move may

encourage firms to raise equity financing, although some

stressed that in the short term bank deposits looked still more

attractive.

"This is a long-awaited development for the Russian market,

which in the long term could significantly alter the balance of

power and restore the dominance of smart money over retail

investors," said analysts at IFK Solid brokerage in a research

note.