URALSIB Capital sponsored the Russia – Capital Raising and Investment summit – Hong Kong
URALSIB Capital sponsored the Russia – Capital Raising and Investment summit – Hong Kong, held on April 12-14, 2010 in Hong Kong.
URALSIB Capital analysts – Chris Weafer, Chief Strategist, Dmitry Dudkin, head of Fixed Income Research, and Oleg Lukhton, Managing Director of Corporate Finance and Consulting, offered summit participants their opinions on the attractiveness of Russian companies and new opportunities on the Asian capital markets.
Chris Weafer believes that the Russian economy has begun its recovery, and expects a 5.5% growth in GDP based on 2010 results. Still the Russian stock market indicators, except for the oil and gas sector, are lower than those in other developing countries, while the growth potential is up to 40% during the coming year. The main risks for the Russian economy, according to experts, are external factors, such as oil prices, the global rate of the economic recovery, and Chinese demand for commodities. The major internal risks are the continuing dependency on raw materials and the material debt burden of Russian companies. "I estimate the total need of the Russian issuers for funds at $50 bln, which should promote new interesting opportunities for foreign investors accounting for quality adjustment initiated by the Russian Government," says Chris Weafer.
In the opinion of Dmitry Dudkin, the Russian government’s $17 bln in Sovereign borrowings planned for 2010-2011 may turn out to be less ambitious. But even these borrowings allow Russia to remain the country with the lowest ratio of debt to GNP at 10% (developing countries are at 30%, and developed countries are at 80-90%). So experts consider as justified the high appetite of the foreign investors for the Russian risk and the extension of the number of industries for investments due to the retail, energy, transport, and financial sectors. "Some news for foreign investors is the fact that due to the loosening of the Bank of Russia’s monetary policy the internal Russian debt market has become the main source of funding for Russian companies, and this will continue for the time being," – stressed Dmitry Dudkin.
As per the estimates of Oleg Lukhton over 30 Russian companies are planning their first stock placement in 2010-2011. Ruble strengthening and the gradual growth in domestic consumer spending return the status of attractive investment market to Russia. Most Russian companies have managed to restructure their debt obligations and avoid bankruptcy, so the next stage of recovery will be a series of M&A deals and fight to profitability. In his opinion, Russian companies and Asian investors have mutual interests. Asian markets have a high liquidity margin which could be reasonably invested in Russian companies operating in Asia, state infrastructure companies or technology sectors. "The conference has become the major floor of communication between Russian and foreign companies interested in cooperation with the Asian stock platforms, which are, no doubt, the most promising at the moment," – stressed Oleg Lukhton.
The Summit, which was held for the first time, was organized by FinanceAsia – the most popular publication in Asia devoted to the capital markets and investment banking. The summit successfully managed to attract the attention of professionals and investors to the Russian market, those who already work in Russia or just wonder about investing in Russia. Over 300 professionals participated in the summit, including representatives of the Hong Kong Government, the Hong Kong Stock Exchange, MICEX, major Russian and foreign financial companies, and issuers.
19 April, 2010
Photo-report of the tour:
