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Photo by Reuters/Gazeta.ru
On Monday, October 6, the Russian market experienced perhaps the worst day in its history. Despite several trading pauses, total market losses equaled to 19 percent. Some Russian blue chip stocks lost nearly 40 percent. Declining oil prices didn’t help the markets either. The ruble-denominated RTS index dropped to 867 points, while the dollar-denominated MICEX halted trading when its index dropped by 18.66 percent, closing at 749.66 points.
Russian companies saw their equity value evaporate on both Moscow and London exchanges. In London, shares of Russia’s “Norilsky Nickel” lost 44.28%, VTB – 36.18%, “Tatneft” - 45,23%, «Uralkaly» – 47,78%, Rosneft» –39,77%, LUKoil – 36,09%, «Surgutneftegaz» – 31,25%, Х5RETAIL – 26,12%. In Moscow, “Norilsky Nickel” plummeted 37.67%, “Rosneft” – 27.41%, Gazprom – 24.42%, LUKoil – 24.16%, “Surgutneftegaz” – 22.92%, MTS – 21.21%, Sberbank – 16.32%, VTB – 24.5%.
Click on the extended post to read more
Continue reading "Russian Market Leads World in Losses" »
Entrance to Micex stock exchange in Moscow
After nearly two days of mandatory vacation the Micex and RTS stock exchanges opened again and set a new all-time record for one-day growth. The RTS dollar index grew by 22.39%, reaching 1295.91 points, while the ruble index of Micex grew by 28.69%, reaching 1098.95. The exchange indexes almost leveled themselves out to the pre-crisis levels. The week of trading resulted in the lowering of the Micex index by 3.4 percent and the lowering of RTS by only 0.2 percent. However, Russian media point out that the growth was artificial and possibly due to high liquidity, a result of the Russian government’s unprecedented actions. Media disagree with many Russian financial experts and warn that external factors might precipitate a loss of market value once again.
Interestingly, the stock exchanges had to halt trading briefly on two occasions Friday due to the extremely fast pace of buying. Traders had only three hours of actual trading Friday, yet they managed to set a record. In addition to the measures described in Russia Blog’s previous article, the Russian Federal Service for Financial Markets prohibited trading of borrowed assets that weren’t fully owned and it prohibited the “short” sales. In addition, the Russian government made a firm statement that its decisions on tax cuts in the oil sector are definite and final. Several private companies, including Lukoil, bought back their own stock.
All the measures and actions aside, experts and media believe that the rebound was mostly influenced by the overall growth of the world market rather than the domestic actions of the Russian government.
Continue reading "Russian Markets' Historic Rebound" »
Russia and the rest of the world have both suffered a terrible week in their stock markets
A misleading calm prevailed in Russia this week after two days in which the Russian stock market crashed and another two days in which the market was closed. The recent plane crash in Perm, the worst in years, was bigger news in Russia than the sinking markets. Russia's news media presented plummeting share losses in a matter of fact manner, while wondering how the Russian government was going to respond to this harsh new economic reality. Markets remained closed on Thursday.
Russian markets fell 17 percent Tuesday, the biggest drop since 1998, bringing market levels to their lowest point since 2005. Gazeta.ru published these illustrative numbers at the moment of the unscheduled early closures of the dollar-denominated MICEX and ruble-denominated RTS stock exchanges: shares of VTB dropped by 32.5%, Sberbank (the largest bank by deposits in Russia) – 20.9%, FSK – 27.6%, Transneft – 24.1%, Tatneft – 15%, Lukoil – 13.5%, Norilsk Nickel – 8.2%, Severstal – 8.7%, Gazpromneft – 8.2%, etc.
Continue reading "Market Failure in Russia: America’s Problem, Nobody’s Problem or Doomsday?" »
Russian Roulette CD cover by Accept
By Richard Hainsworth
Originally published in Moscow Times
When Russian troops moved into Georgia, foreign investors moved out and the Russian market plummeted. When U.S. troops moved into Iraq, foreign investors hesitated but the U.S. market barely blipped. Is this a double standard?
Not really. The difference lies in the way investor perceptions are challenged or fulfilled by the political decisions of a country's leadership. Investors create models about their investments -- how much they are promised at the point of sale and how much they are likely to get back in a variety of circumstances. These models can be simple, ranging from a conceptual understanding about a company and the environment it operates in, to a complex econometric simulation with all the macro indicators included. Investor models implicitly include uncertain factors, such as interest or exchange rate movements. Geopolitical decisions must also be included because investors need to know in advance the possible trajectories of government action.
Continue reading "Moscow Times:
Russian Roulette for Investors" »
Download the PDF version of the report
"Behold the Bear: Ten Reasons Americans Should Care About Russia"
The war in South Ossetia and Georgia, though appalling, resulted in fewer deaths and damage than originally reported. It is still not "over" and probably won't be for some time. Meanwhile, it definitely did serious damage to Russia's relationship with the West. In some ways, relations are worse than at any time since well before the collapse of the USSR--in other words, in roughly a quarter century.
We are going to say a lot more on this, and we are not inclined to be particularly laudatory to any of the players. The war has not made any country look good.
Meanwhile, before the war we wrote a report on Ten Reasons Americans Should Care About Russia. It follows, and, as you will see, it remains valid. Perhaps as tempers cool, people of good will can consider what is at stake; what there is to gain, and what there is to lose.
Download the PDF version of the report, or proceed to the extended post to read the online version of the publication.
Continue reading "Behold the Bear:
10 Reasons Americans Should Care about Russia" »
Reuters has an interesting update on the subject of my Russia Blog post from last week (The Consequences of Growing U.S.-Russia Financial Ties That Bind).
As it turns out, the Russian Central Bank still owns $50 billion in U.S. government-backed agency securities, including Fannie Mae and Freddie Mac, but this is short term (less than one year) paper, and the central bank will let the paper reach maturity and presumably move on to another investment. Russian sovereign holdings of U.S. agency securities are still dwarfed by the $400-$500 billion held by Chinese central banks.
Click on the extended post to read an excerpt from the Reuters story.
Continue reading "Reuters: Russia Cuts Exposure to Fannie, Freddie" »
Russia's Central Bank does not hold Fannie Mae and Freddie Mac debt - but what about the rest of its U.S.-mortgage backed debt holdings?
Over a year ago I wrote about Deputy Secretary of the Treasury Robert Kimmitt's trip to Moscow ("Is the U.S. Seeking Capital from Russia's Stabilization Fund?"). In June 2008 RosBusinessConsulting reported that Mr. Kimmitt was in Moscow to ask the Kremlin and Russia's Central Bank to invest more petrodollars in the U.S. Mr. Kimmitt gave RBC an interview, but provided few details about his discussion with Russian Central Bank officials, so the report was largely ignored by the Western media.
At that time, American media outlets were more focused on the prospect of Arab and Chinese sovereign wealth funds acquiring equity stakes in U.S. companies, and the potential political backlash to such moves. Russian companies such as Evraz and Severstal have proven to be saavy about their American acquisitions, (so far) flying under the radar screen of an increasingly unpopular and protectionist U.S. Congress, which clearly has much bigger fish to fry now than worrying about what the Russians are buying.
As we now know, most of the Russian money that was invested in America went into "safe" U.S. government-backed agency debt securities. After the collapse of IndyMac Bank in California on July 12, 2008, Russia's Central Bank denied that it held any Fannie Mae or Freddie Mac equity, and declared its billions in U.S. debt holdings to be safe. Today the New York Times is reporting ("Trouble at Fannie Mae and Freddie Mac Stirs Concern Abroad") that Russian buyers currently hold $75 billion worth of U.S. agency securities backed by pools of mortgages, farm credits, and other loans.
Continue reading "NYT: Russians Hold $75 Billion of U.S. Agency Securities The Consequences of Growing U.S-Russia Financial Ties That Bind" »
The Russians are coming West with money. Should we be scared?
There are some books that surprise you with their depth or give you a new insight on past, present or future world events. The new book by The Economist's Eastern Europe reporter Edward Lucas, The New Cold War: How the Kremlin Menaces Both Russia and the West does not fall this category. Rather, the book is largely a rehash of an argument anyone who has been paying attention to the Western media coverage of Russia over the past eight years will find familiar: after a brief flirtation with democracy under Yeltsin, the Russian people, led by their new Czar Vladimir Putin, are turning their backs on freedom in return for virulent nationalism and oil-fueled economic growth.
Continue reading "Dealing with a Resurgent Russia
A Review of Edward Lucas' The New Cold War" »
In the wake of his interesting announcement at the 2008 St. Petersburg Economic Forum that Gazprom is seeking a stake in a proposed Alaska/Canadian natural gas pipeline to the lower 48 U.S. states, CEO Alexei Miller made headlines again this week in France. In a briefing to European energy executives in the French coastal city of Deauville, Mr. Miller predicted that world oil prices could reach $250 per barrel by 2010.
While many energy analysts were quick to dismiss these comments from a CEO representing an energy company with larger oil reserves than many OPEC countries, Mr. Miller's statement, combined with a comment from the Vice President of OAO Lukoil in April 2008 that Russian oil production might have peaked last year, could send world energy prices higher in the coming months. In the first quarter of 2008, Russia surpassed Saudi Arabia as the world's largest oil producer.
Click on the extended post to read excerpts from the articles by Bloomberg and Reuters.
Continue reading "Gazprom Chairman Predicts $250 Oil
Russia Creates Sovereign Wealth Investment Manager" »
Artist's rendition of the $5 billion Crystal Island mega-development in Moscow
Once completed, it will be the largest building in the world
Last year I had the opportunity to attend Renaissance Capital's 11th Annual Investors Conference. Even though I will not be attending this year's event, I decided to post RenCap CEO Stephen Jennings' excellent article published on Monday in The Moscow Times, outlining some major themes of the conference:
We live in an age of accelerating economic convergence. The world's new economies --with Russia among the leaders -- will drive global growth and value creation in the early decades of this new century.
This tectonic shift is now firmly under way, but few have taken on board the far-reaching implications. For example, the world's largest businesses will be from new world economies and the world's most influential businesspeople will be Russian, Chinese, Indian and African. New world investment funds will dwarf their Western counterparts. The dollar will become only one of many reserve currencies. Moscow, Singapore, Shanghai and Dubai, will, alongside London, be where the majority of wealth is managed and traded.
Continue reading "Russia Has Emerged At Last" »
A younger Stephen Jennings (Photo by: Bloomberg)
Renaissance Capital, the leading investment bank in Russia and sub-Saharan Africa, kicked off its 12th Annual Investors Conference in Moscow this past Monday. The theme of this year's conference is "Russia: Power in Renewal". Renaissance Capital CEO Stephen Jennings published an article on the themes of the conference in the Monday edition of The Moscow Times, contending that emerging markets will soon invest more in eachother than in developed markets and that Moscow will join Shanghai, Singapore, Dubai, and London among the top seven global financial centers in the next few years.
In light of RenCap's growing influence role in Russia and many other emerging markets, Russia Blog decided to publish two background articles about its co-founders, Stephen Jennings and Alexei "Boris" Jordan. For its part, the The New Zealand Listener magazine (see extended post for text) reported in August 2007 that Mr. Jennings, a native Kiwi, is now a billionaire. If this claim is true, it would make him the richest Westerner and one of the wealthiest foreigners residing in the Russian Federation.
Click on the extended post to read the full NZ Listener article
Continue reading "The Founders of Renaissance Capital and the
Privatization of Russia, Part 1" »
Boris Jordan is a Russian-American investment banker and philanthropist
Alexei Borisovich Jordan is an American citizen, born in 1967 to a family of Russian emigres. As an a 26 year-old, Jordan came to Moscow in 1992 to work for the investment bank Credit Suisse First Boston. Jordan's main partner at Credit Suisse Moscow was a 32 year-old New Zealander named Stephen Jennings, who would later join him in founding Renaissance Capital in 1995. The two Westerners worked with the Russian reformers Yegor Gaidar and Anatoly Chubais, and Viktor Chernomyrdin in the early Nineties to privatize state assets and convert the shattered Soviet system into a market economy.
Due to their involvement in the privatization vouchers and notorious "loans for shares" programs, Jordan, Gaidar, and Chubais all remain controversial figures in Russia. However, in a candid interview for the PBS series "The Commanding Heights" conducted in 2000 (see extended post), Jordan contended that Russian reformers had no choice but to rush to stay one step ahead of their entrenched opponents, the powerful Soviet industry bosses and their Communist allies in parliament. "The Commanding Heights" builds on this idea by presenting as history the notion that Yeltsin cut a Faustian bargain with Russia's budding oligarchs to win the decisive 1996 election. In return for oligarch money and media support against the opposition Communists, Yeltsin allegedly agreed to allow these businessmen to acquire control over vast complexes of natural resources (like Norilsk Nickel and Yukos) for pennies on the dollar of their fair market value.
Even with the painful but ultimately successful transition to a market economy, Jordan speaks with passion about the toxic legacy the Soviet system left behind on the health and morality of the Russian people. In "The Commanding Heights" interview, Jordan described how he arrived in Moscow with an almost missionary zeal to revive the Great Russia his parents had raised him to remember. Jordan's moral views continue to be expressed in his continued philanthropic support for the Cadet Corps, a Moscow-based charity for boys that promotes the "rebirth of spiritual, moral, cultural and military-patriotic Russian traditions in the system of education, instruction and formation of the new generation." At the close of his "Commanding Heights" interview, Jordan also expressed his support for President Putin's efforts to reign in the power of the oligarchs, comparing it to U.S. President Teddy Roosevelt's trustbusting in early 20th century America.
Click on the extended post to read Jordan's interview interview in the year 2000 for the PBS series "The Commanding Heights, based on the book of the same title by Daniel Yergin and Joseph Stanislaw.
Continue reading "The Founders of Renaissance Capital and the
Privatization of Russia, Part 2" »
Dmitry Medvedev speaking at the St Petersburg International Economic Forum on June 7, 2008 (Photo by Reuters)
ST PETERSBURG, Russia -- Russian President Dmitry Medvedev blamed "aggressive" United States policies on Saturday for the global financial crisis and said Moscow's growing economic muscle could be part of the solution.
"Failure by the biggest financial firms in the world to adequately take risk into account, coupled with the aggressive financial policies of the biggest economy in the world, have led not only to corporate losses," Medvedev told Russia's main annual event for international investors in St Petersburg. "Most people on the planet have become poorer."
Continue reading "Medvedev Blames U.S. for Global Financial Crisis
Reuters Reports" »
UPDATE: This article has been reposted on former Texas GOP Chairman Thomas Pauken's website Dallas Blog. Russia Blog congratulates Mr. Pauken on his recent appointment by Governor Rick Perry to serve as Chairman of the Texas Workforce Commission.
On their web page Renaissance Capital is promoting their 12th Annual Investor Conference by citing my comments about attending their conference last year. (Click here to read RenCap's quote from Russia Blog).
In 2007 Renaissance Capital's keynote speaker was Gen. (ret.) and former U.S. Secretary of State Colin Powell. This year the featured speakers are former British Prime Minister Tony Blair and former U.S. Secretary of State Henry Kissinger.
Continue reading "Renaissance Capital Cites Russia Blog" »
Moscow-based venture capitalist Tom Nastas is president of Innovative Ventures Inc.
Editor’s note: The Russian government is investing to renew its leadership position in technology. In this first part in a series of four articles, venture capitalist Thomas Nastas discusses the role of governments in technology creation. This and subsequent opinion pieces published in Vedomosti are from Mr. Nastas’ article "The Go Forward Plan to Scaling Up Innovation" published in The Harvard Business Review, Russian edition, June/July 2007 and Hungarian edition, October 2007.
While companies are responsible for innovation in their enterprises, the creation of knowledge based economies can’t happen without the political will and investment of governments. Knowledge creation touches on so many of their duties like education, R&D, IP (intellectual property), policies in innovation, trade and investment and the enabling environment. Achieving political consensus on the mission and the funding to execute is controversial, so some governments take smaller but achievable steps to knowledge creation.
One strategy is to make more capital available for investment. The ‘Yozma’ fund-of-funds was an investment company with $100 million from the Israeli Government, $80 million for investment into the creation of new VC funds and the remaining $20 million for direct investment into Israeli technology companies. Yozma invested $8 million into a private VC fund with $12 million invested by Israeli and foreign investors. Yozma let fund managers ‘buy-out’ the Government’s equity stake after five years.
Click on the extended post to read more of this article and to view the Russian version.
You can read the original article in Vedomosti here.
Continue reading "The March to a Knowledge-Based Economy
in Russia, Part 1" »
Watch the video of my interview with Russia Today TV here
Last week I was interviewed in Red Square by Russia Today TV about the Russian presidential elections and Russia's economy.
Click on the links below to read my previous articles published on Russia Blog:
Scaling Up the Innovation Ecosystem
(This article was originally published in the Russian and Hungarian editions of
The Harvard Business Review)
A Go-Forward Path for Generating Prosperity
Venture capitalist Thomas D. Nastas is president of Innovative Ventures Inc. of the USA and Russia and serves on the Board of Directors of Sotsgorbank of Moscow. Mr. Nastas is also Professor of Marketing, American Institute of Business & Economic College in Moscow.
Thomas Nastas is an American venture capitalist based in Moscow.
You can read Tom's profile in the Moscow Times here
Hungary, Brazil, Russia, India, China (BRIC), Chile and others are replicating the strategies that made Israel, the US, Korea and others so successful in the creation of knowledge economies. Do alternatives exist with less risk and better chances of success in taking a seat at the global table of tech developers?
This article was originally published in The Harvard Business Review's Russian and Hungarian language editions in 2007. To read this article in Russian, complete with text boxes, click here for a PDF version, here in Hungarian and here for an English translation.
Click on the extended post to read the rest of the article without text boxes. To read an abbreviated version of this article previously published on Russia Blog, click here.
Continue reading "Scaling Up the Innovation Ecosystem" »
Last week, the Heritage Foundation, one of the largest and perhaps most influential think tanks in Washington, D.C., published its annual global rankings of economic freedom. While think tank reports seldom have as much impact as their authors would like to believe, this particular document was published in partnership with The Wall Street Journal.
The report claimed that out of 150 countries surveyed in 2007, Russia is now ranked 134th in the world in terms of economic freedom, allegedly slipping fourteen spots from its lowly 120th ranking at the end of 2006. Russia was supposedly less free than all of the other countries in the former Soviet Union, with the exceptions of Belarus and Turkmenistan. Russia is also said to be lagging far behind such surging economic powerhouses as Pakistan and Cambodia.
Continue reading "Rankings Versus Reality:
It’s Time for Inside-the-Beltway Conservatives
to Get Real on Russia" »
Innovation, small- and medium-sized enterprises, or SMEs, entrepreneurship and venture capital are ingredients in creating knowledge-based economies; witness the successes in California's Silicon Valley. Small economies countries like Israel and Singapore with little domestic demand for technology have developed unique approaches to exporting knowledge creation.
Russia is now investing to try to replicate the strategies that have been so successful for SMEs in Israel, Korea, Singapore and Taiwan -- the development of technologies for global markets. Do these strategies offer the best chances for success? Are there alternatives and, if so, how can Russia tap them to generate new wealth and prosperity?
Continue reading "A Go-Forward Path for Generating Prosperity" »
From a press release posted recently on CNN Money.com:
Golden Telecom, Inc. ("Golden Telecom" or the "Company") (NASDAQ: GLDN), a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the Commonwealth of Independent States ("CIS"), announces today the closing of the acquisition of a 100% stake in LLC "New Telecom Technologies" ("NTT") in Krasnodar -- an alternative carrier providing communication services to business customers and carriers in the region...
The acquisition of NTT is part of Golden Telecom's successful regional expansion strategy. Golden Telecom already owns and operates sizeable local and intercity networks in Novorossiysk, Gelendzhik, Sochi and other cities in the Krasnodar region. In Sochi, Golden Telecom offers long-distance services, corporate networks and Internet access through Sochi Telecom, a telecom operator established in 1999 and acquired by Golden Telecom in October 2005.
Golden Telecom joins Rostelecom (NYSE: ROS) and Vimpelcom (NYSE: VIP) among the fastest growing publicly-traded companies in the Russian telecommunications sector.
Click on the extended post to read more Krasnodar business news.
Continue reading "Krasnodar Business Round-Up:
Golden Telecom Buys NTT
Marchmont Capital Looks to the Regions" »
Moscow skyscrapers along the Moskva River at night
In case you missed it due to all of the recent political news from Russia, here are several articles about the Russian economy and foreign investments in the country from December 2007:
Ignoring Global Credit Crisis, Economy Grows 7.6% in Q3
BLOOMBERG
Monday, December 10, 2007
The economy expanded an annual 7.6 percent in the third quarter, better than expected, suggesting that problems on global credit markets have not had a major impact on the country.
Gross domestic product growth followed expansion of 7.8 percent in the second quarter and 6.8 percent in the third quarter last year, the Federal Statistics Service said on its web site Friday.
The data are not seasonally adjusted.
"The effect of the global credit crunch was less significant than some feared," said Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow. Capital investment and consumption were "strong and remained the main drivers of growth."
You can read the rest of this Bloomberg news story at the Moscow Times website. Click on the extended post to read more Russian business news.
Continue reading "Russian Economy Grows 7.6%
In 3rd Quarter of 2007" »
An executive on the roof of a warehouse at the Pushkino Industrial Park near Moscow
Source: Lone Star Ventures (www.lonestar.ru)
The biggest story in Russian business this week is the UK-based Belgravia Investment Group's announcement of a $2 billion dollar joint venture to develop Russian business parks. The deal involves the Immo Industrial Group, a Belgium-based manager of industrial properties in Europe, and the Russian restaurant holding company Rosinter, which is best known for bringing Kentucky Fried Chicken to Russia.
The total size of the development will be two million square meters (21,527,820 sq. ft.) At least 44 industrial tenants have already leased space, and the Hilton Hotel chain has agreed to build hotels near all fifteen sites, including in Moscow, St. Petersburg, Novosibirsk, Rostov-on-Don, and several other cities. Rosinter will build Sushi Planeta, TGI Friday's and 1-2-3 Cafe restaurants to serve employees at the sites.
Click on the extended post to read more.
Continue reading "$2 Billion for New Business Parks in Russia" »
A postcard from Tverskaya in downtown Moscow
This week the Moscow Times newspaper hosted a conference, "IPO: New Opportunities for Russian Companies" sponsored by PriceWaterhouseCoopers, the Russian Investment Club, Finance magazine, the Finam Investment Company, and several other corporate sponsors. The September 18, 2007 conference featured high level speakers from the PIK Group, DLA Piper, the Federal Financial Markets Service, and Deutsche Bank. The event was hosted at the Marriott Grand Hotel in Moscow, located one block away from the Kremlin on Tverskaya.
Elena Khisamova, Deutsche Bank Russia's acting Head of Equity Capital Markets, provided the headline of the day with her estimate that 200 Russian companies, representing an estimated $500 million in combined market capitalization, have the potential to launch IPOs in the near future. In addition to her remarks about Russia's rising smallcaps, Mrs. Khisamova added that in the first nine months of 2007, Russian companies have recorded over $22 billion in initial and secondary placements.
Click here to read an article about the conference from Russia's Interfax News Agency.
Bill Robinson J.D. speaking at the Real Russia Project event, "Russia: Friend, Foe, or What?" held April 18, 2007 at the University Club in Washington D.C.
Last week The Journal of the Business Law Society at the University of Illinois College of Law published an article citing the Real Russia Project, "The Forecast for Foreign Investment in Russia: Should Investors Expect a Warm Climate or Cloudy Skies?" .
In her article, Illinois law student Eugenia Izmaylova frequently cites Bill Robinson, a Bellevue, Washington based attorney who has been practicing law in Russia and the former USSR since 1990. In particular, Ms. Izmaylova quotes Bill Robinson's thoughts on the development of intellectual property law in Russia since the collapse of the Soviet Union (a transcript of Mr. Robinson's remarks - along with commentary from his co-panelists at the Real Russia Project forum - is available for downloading in PDF format here)
Click on the extended post to read excerpts from the Illinois Business Law Journal article.
Continue reading "Illinois Law Journal Cites the Real Russia Project" »
A banner ad for Russian cellular provider MTS near the Kremlin
For months, the transition to a new President next year has been a hot topic for speculation in both the Russian and Western media. While President Putin's surprise appointment of Viktor Zubkov as Prime Minister has dominated the news from Russia this week, business marches on. Today Mr. Zubkov's statement that he would consider a run for the presidency has drawn a lot of attention to the previously obscure technocrat. But what do Russia's top executives expect in the upcoming election year?
On September 10 and 11, 2007, Reuters hosted the Russian Investment Forum in Moscow. The list of speakers was a who's who of corporate Russia (click on the extended post to read more)
Continue reading "Reuters Hosts Russian CEOs, Private Equity Firms" »
Director of Equity Financing, FINAM Investment Company, Moscow
Starbucks has finally come to Moscow, but what's next?
The phenominal growth we are now witnessing in Russia can and should be compared to the much more hyped boom in China. Although Russia's stock markets did react to the subprime volatility emanating from American credit markets, the Russian economy is not nearly as vulnerable to shocks originating from abroad as it was just ten years ago, when the devaluation of Asian currencies and the near-bankruptcy of the Yeltsin government devastated the ruble. Clearly that was then, this is now. The New Russia has shrugged off the recent corrections in both the U.S. and Chinese stock markets to continue what has been a record-shattering year for IPOs and foreign investment.
A few weeks ago the Russian Federal State Statistics Service produced a report indicating that Great Britain was the largest investor in Russia, investing $15.0 billion in the first half of 2007. Ironically enough, the vast majority of this new investment – approximately 80% - came in the second quarter of the year, when a diplomatic row erupted between London and Moscow over the Alexander Litvinenko case. In spite of Moscow's refusal to turn over its citizen Andrei Lugovoy, or London's refusal to extradite the exiled oligarch Boris Berezovsky, politics did not seem to affect business at all. Most of the major UK investments for H1-2007 went into the wholesale and retail sectors.
Continue reading "Taking Stock of Russia's Growth" »
Director of Equity Financing, FINAM Investment Company, Moscow
Construction of the Moscow City complex in 2005...compared to today
Photo by: Moscow Government International and External Economic Relations
In my Russia Blog posts I have written repeatedly about how the Russian construction sector is proving to be extremely attractive to global investors. Recent news reports confirm this view. In fact the U.K. Independent recently produced a short overview “A Global Property Boom: Russian Style” that describes what is going on in Russia.
“The place to be for booming commercial property development right now is Moscow. According to international property analyst Knight Frank, new developments of high-grade office space in the Russian capital have doubled since 2003, with a further 1.5 million square feet of space becoming available before 2011.” As a Muscovite who has observed these tremendous changes firsthand, I can confirm this.
Continue reading "The Russian Construction Boom Continues" »
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