30.12.2004 Russia, Moscow. A man hold euros in front of a skyscraper.
Photo: PhotoXpress
|
 |
Capital Inflows
// Foreign investors and Russian indexes broke ten-year-old records
Last week the inflows of capital in the funds investing in Russia and the CIS (Commonwealth of Independent States) broke the record set February, 2006. Funds raised as much as $403 mln after Vladimir Putin’s statements concerning the easing of the tax burden of oil companies. Oil securities increased by 11.82–24.92% within the week, and the RTS index, exceeding the historical maximum, showed a record week’s rise since June, 2006. Experts say the growth is likely to keep on.
According to Emerging Portfolio Fund Research (EPFR), within the week that ended May 14, the inflows of capital in the funds investing in Russia and the CIS states amounted to $403 mln. This result far surpassed that of the previous week ($51 mln), and is a record one within 2 years. A bigger volume was invested by non-residents only February, 2006. At that time the RTS index rallied by 30% because of the surge in oil quotations.
Last week the key reason for the growth of the Russian market and the increase in capital inflows in the country was Vladimir Putin’s statement regarding the lowering of taxation of oil companies, which he made during the Duma session May 8. May 14 the Prime Minister once again assured everyone of changing the regime of taxation for oil companies in the near future. At that, oil prices go up, just like in 2006. Yesterday the WTI barrel grew by 2.5% hitting the $127 target.
Within the week that ended May 14, Russia’s RTS and MICEX (Moscow Interbank Currency Exchange) increased by 9.29% and 9.48% correspondingly. As a result, they made up for the drop during the financial crisis. Yesterday the RTS index rose by 8.2% compared with the beginning of the year, and the rouble MICEX – by 2.9%. The striking difference between the pace of growth of the two Russian indicators can be explained by the fact that the RTS index is measured in dollars, and the MICEX one – in roubles.
Within the week the RTS and MICEX indexes jumped by 8.53% and 8.25% correspondingly, which is the biggest week’s growth since late June 2006. In 2006 the growth was brought about by a technical rebound after a deep fall. Last week the rise of RTS and MICEX equated to 194.88 and 148.21 points in real terms, which was an absolute record.
It is the surge of oil quotations that accounts for the Russian indexes going up. Within the week, Gazprom Neft stocks grew by 11.82% in MICEX, Lukoil – by 16.23%, and Rosneft – by 20.98%. The highest increase was shown by the securities of Surgutneftegaz (+24.92%). Experts explain it by the fact that the pace of the increase in its securities has been lower than that of the other oil companies. Within 3 previous months Rosneft securities went up by 40%, whereas ordinary Surgutneftegaz stocks – by 20%, and those privileged ones – by 10%.
The capital inflows in Russia have been the highest compared with the rest of the BRIC countries. Not only did the investments in Russia turn out higher than in India ($120 mln) and Brazil ($210 mln), but they also outdid the unqualified leader – China ($103). A week ago the inflows in China amounted to $615, exceeding Russia’s result 12 times. “The Russian stock market was falling behind the BRIC states for quite long, and now its time has come,” rejoices Denis Novikov, Head of the Operations Department with the Alliance Continental management company.
Experts point out that it’s major western investors that mostly account for the demand for Russian stocks. At the same time there has been no particular inflow in Russian mutual funds, even outflow has been indicated with some of them. “It often happens that the maximum of capital inflows in mutual funds is registered on the threshold of a collapse, and outflows – before a rally when inexperienced investors make mistakes. It’s the way large professional funds outdo the multitude and buy up shares,” Denis Novikov says. “The inflows are indicated in the metallurgical and oil and gas funds,” states Andrey Kilin, Assets Manager with Alfa Capital. “Shareholders left some other funds waiting for the moment to quit when the market was about to plunge, thus they intended to save their profits.”
Analyst opine that the Russian market will keep on growing, which will foster new investments. “The interest in the Russian market will be high, but you shouldn’t expect another surge of that kind – the market will go up steadily,” Denis Novikov means. “The growth potential of Russia’s market hasn’t been exhausted yet,” hopes Chief economist with Deutsche Bank, Yaroslav Lissovolik. In his estimation, the RTS index may hit the 2500-2600 target within a month.
Nailya Asker-zade
All the Article in Russian as of May 17, 2008
|
|
|
