Even as Western investors are looking at the long-term prospects in Russia, mutual fund clients are worried about the repercussions of a possible U.S. recession and a possible correction on the stock market after the unexpected jump.
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Mutual Funds Lose while West Invests
The influx of funds invested in Russia and the CIS last week, at $541.2 million, was the highest since the beginning of 2006, says Emerging Portfolio Fund Research. The previous week’s indicator was $403 million. Experts say that, as oil prices continue to rise, Russia’s raw materials-oriented market is becoming ever more attractive for foreign investment, and the most attracting among the BRIC (Brazil, Russia, India and China). The price of Urals oil rose 5.47 percent last week. The RTS and MICEX indexes rose 2.56 and 2.55 percent, respectively, in the same period. In the same week, $386.6 million was invested by foreigners in Brazil and $130.5 million in India.
Russian private investors do not share in the West’s enthusiasm. According to Deutsche Bank, in the week ending on May 21, $118 million, 1.7 percent of the total assets under their management, was withdrawn from Russian mutual funds. Since the beginning of April, $507 million have been withdrawn from those funds. The outflow of funds from mutual funds has been in progress for ten weeks now, the longest period of outflow since July 2005. “Private clients get uncomfortable when the market grows 18 percent in a month,” explains Igor Ryabov, head of the collective investment department at UFG Asset Management. Even as Western investors are looking at the long-term prospects in Russia, Mutual fund clients are worried about the repercussions of a possible U.S. recession and a possible correction on the stock market after the unexpected jump.
Experts say the situation may change soon, economists say. While foreign investment is likely to increase, investment in mutual funds should turn around in the middle of summer. The Russian stock market is also expected to continue rising.
www.kommersant.com
All the Article in Russian as of May 26, 2008
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