So wild that it can work

Businessweek about investment prospects in Russia

Most Western experts believe that investments in Russia are now carrying too much risks. Businessweek reporter Ben Styverman studied the opinion of the minority and wrote a small note about why investments in Russia can now be justified.

At first glance, writes Styverman, it seems that there is no reason to invest in Russia. The devaluation of the ruble, a decrease in oil prices, recession, conflict in Ukraine, sanctions and unpredictable government - all this does not contribute to investments. The MSCI index in Russia has been reduced almost half over the past year, and its fall may continue in 2015 and in 2016.

And yet, against this background, investors continue to invest in Russia. For example, the largest American fund investing in the country, Market Vectors Russia ETF, attracted $ 861 million from August last year? Why?

Investors remember that historically the Russian government thinks more about reforms when oil prices are low. In addition, sanctions imposed against Russia by Western countries, of course, complicate the life of Russian companies, but still they are not as serious as in relation to Iran, Cuba or North Korea. In addition, Russia still has a small public debt and significant international reserves; Europe still depends on Russian energy resources.

The risks of investments in Russia are high, but the return can also be significant. In companies from the MSCI RUSSIA index, the average price/profit (capitalization divided by annual profit) is 4, in the American S&P 500 - 18.1 index, and this indicates a serious underestimation of Russian securities.

The Research Affiliates investment company calculated that the profitability of investment in the Russian market can be 16.9% per year for 10 years - this is more than in any other country.

Oil below $ 50 per barrel can make Putin finally do something with the country's economy, known for its low efficiency and excessively dependent on the production of energy resources. (English.
Businessweek

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So wild that it can work

Businessweek about investment prospects in Russia

Most Western experts believe that investments in Russia are now carrying too much risks. Businessweek reporter Ben Styverman studied the opinion of the minority and wrote a small note about why investments in Russia can now be justified.

The Research Affiliates investment company calculated that the profitability of investment in the Russian market can be 16.9% per year for 10 years - this is more than in any other country.

Oil below $ 50 per barrel can make Putin finally do something with the country's economy, known for its low efficiency and excessively dependent on the production of energy resources. (English.
Businessweek