RUSSIA PRONOUNCED "MERCHANT'S SAFE HAVEN"

HomeNewsRUSSIA PRONOUNCED "MERCHANT'S SAFE HAVEN"

Despite the numerous shortcomings of the economic and business climate, compared to other countries Russia is a safe haven for investment. Such was a joint opinion of the Russian and foreign participants of the Moscow Exchange Investment Forum in New York. The potential investors look at macro indicators, which set Russia among the most reliable of the emerging markets, experts commented.

Meanwhile, Russian economy remains among those not the most transparent and clear. European financial experts are preoccupied with Russia's very low 'public debt to GDP' ratio, which stands today at 12%. Taking into account the public assets on accounts with the CBR and other credit institutions the country has no net debt whatsoever.

Elina Rybakova, Deputy Chief Economist of the Institute of International Finance (IIF), asserts that Russia is currently pursuing remarkable monetary and fiscal policies, coping with cyclical factors and issues. Structural problems and a large share of non-resident investors in the state bonds and securities are seen as major factors in Russia. Should these investors decide to sell off their share of securities, i.e. about 30%, the sovereign will have to increase the yield to buy them out on the local market, which in turn will bring new complications.

By mid-2019 foreign investment funds own shares of Russian companies worth USD 79.3 billion. More than a half, or 51%, are held by the investors from North America, while 46% are held by the European capital. Meanwhile, sanctions are of little concern to these investors. Owners of Russian securities believe that their cost includes eventual risks, while the danger of new restrictive measures remains insignificant.

Previously Russia has already been called a safe haven. This was the definition used last year at the Davos forum by the Minister of Finance Alexei Kudrin. As he later explained, the Russian authorities “were too quick to relax”, as if feeling like the global crisis would never knock on the door in Russia. This, however, became the case only six months later.

In October this year, the World Trade Organisation (WTO) considerably worsened its outlook for world trade growth. Given the tension of the trade war between the U.S. and China this indicator, affirms WTO, will not exceed 1.2%. This is the worst result in 10 years since the 2008 crisis.