The Rise of Europe, Asia and Russia
Director of Equity Financing, FINAM Investment Company, Moscow
The BRIC countries - Brazil, Russia, India, China - will account for
the majority of growth in 21st century emerging markets
Last week (the 14th week of 2007) featured many discussions in the media regarding the growing role of new centers of investment activity around the world. The most recent trend of discussion started with an article by two managers at International Capital Strategies that was published in The Wall Street Journal on March 29 titled "Capital Warfare". Here are some notable observations from this piece:
- "A recent survey of financial professionals found almost two-thirds believed that London would consolidate its position as the global center of finance by 2015, 13% predicted Dubai, 10% pointed to Shanghai and fewer than one in ten gave a nod to New York. The U.S.-led unipolar financial era appears to be slipping away."
- "The U.S. faces stiff competition as an investment destination from resource-rich developing countries. "While the embrace of markets and capitalism by countries like China, Russia and even Vietnam represents a long-sought triumph over communism, the U.S. must nevertheless recognize the ancillary consequences of this victory. We now have to compete with them."
- "Russia has recently raised enormous sums without directly accessing U.S. capital markets or investors (i.e. Rosneft and Sberbank)
Click on the extended post to read more.
Graph projecting growth of Brazil, Russia, India, and China's combined GNP by 2040
Source: BRIC Consulting
Last week we read the Financial Times and found out that Europe has surpassed the U.S. in stock market capitalization for the first time since World War I. Europe's twenty four stock markets, including Russia, saw their capitalization rise to $15.72 billion, as compared with the $15.64 billion market value of the U.S. Sure enough, we have heard from the angry chief of the NYSE dismissing this trend as irrelevant, but that is his business.
Meanwhile, last week in Moscow, the London Stock Exchange and the MICEX hosted a significant event where we heard very nice remarks about the emerging Russian market from British financial industry experts. This enthusiasm from major foreign investors is contrasted with the sour remarks made on Thursday, April 5 by Robert Amsterdam, a Canadian attorney who currently serves as defense counsel for former Yukos CEO Mikhail Khodorkovsky. The headline on Mr. Amsterdam's blog reads: "London Feeling the Heat on its Lax Rules for Russian IPOs" (you can read a response from James, the editor of RobertAmsterdam.com here.)
Meanwhile we have heard several positive things about the Russian market as well:
- Goldman Sachs is considering stepping up its operations in Russia
(see the Russia Blog post, "Kremlin Welcomes Goldman Sachs Back to Russia")
- The European Bank for Reconstruction and Development is expanding its operations in Siberia with plans to open a representation office and fund a municipal housing project in the region.
- Baring Vostok Capital launched a new private equity investment fund worth $1 billion, which will focus on investments in Russia, Ukraine and Kazakhstan.
- Shinhan Bank, the second largest bank in South Korea, is hunting for a suitable acquisition target in Russia.
- Trieste, Italy-based Generali Group, the fourth largest insurer in Europe, has entered the Russian market.
- Discussions are being held with the United Arab Emirates shipping company Dubai Ports World regarding proposed investments in developing special economic zones at Russian ports.
- Two European investment funds - Index Ventures (Switzerland) and Holtzbrinck Ventures (Germany) - and Cisco Systems have agreed on investing $18 million into Ozon.ru, a Russian counterpart to Amazon.com. The stake acquired is reportedly in the range of 20%-30%.
More Strong IPO Candidates
- Both the MICEX and RTS stock exchanges have announced their plans to list shares.
- Zenit Bank -- IPO in 2007
- Unistream, a wire transfer bank -- IPO in 2008
- Altimo - a major telecommunications holding company -- is planning an IPO on the London Stock Exchange
- Sovcomflot energy shipping company -- up to 20% placement in IPO for 2007
- Renova Media Holding -- IPO in London or Amsterdam at the end of 2008
- PIK Group, real estate developer -- IPO in London and Moscow -- May 2007
- Timber Group Limited, formerly Tynda Forest Holdings Limited, - IPO in London
Power plant turbine manufacturer Power Machines is positioning itself
to profit from surging demand for electricity in Russia
- Power Machines, a key producer of electric power plant turbines - IPO in the second half of 2007
- Russian Media Group, a holding company for radio stations -- IPO in 2010
- Modny Kontinent, a high fashion boutique retailer-- IPO in 2009
- Transaero Airlines - IPO in 2008.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and do not necessarily reflect the views of the FINAM Investment Company.
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