URALSIB Capital and Institutional Investor Magazine hold a round table: Investments in Russia: a New Landscape
On 7 September 2009, URALSIB Capital in cooperation with Institutional Investor Magazine held a round table, titled Investments in Russia: a New Landscape, at the London Stock Exchange.
The following experts participated in the discussion: Vladimir Tikhomirov, chief economist at URALSIB Capital; Leonid Slipchenko, senior Banking analyst at URALSIB Capital; Yevgeny Gavrilenkov, chief economist at Troika Dialog; Ghadir Abu Leil Cooper, head of Emerging Equity Markets in Europe, the Middle East and Africa at Barings; Sonya Dilova, credit analyst at Foreign & Colonial Investment Trust; and Frank Gill, Director of European Sovereign Ratings at Standard and Poor’s.
The discussion mainly focused on ways to solve the fundamental problems in Russia’s economy. Opening the discussion, John Hitchcock from Institutional Investor Magazine noted that “Russia has not disappeared from the investment map, but the investment community is wondering whether or not the current crisis will become a turning point for the Russian economy, a catalyst for long-needed economic reforms as well as an impetus for further diversification of the country’s economy and the creation of a healthier investment climate. This event, with URALSIB Capital’s participation, provides an opportunity to ask the right people the right questions.”
Experts believe that the main question today is whether the current crisis will strengthen or weaken the Russian economy. Vladimir Tikhomirov said that lower oil prices could stimulate economic reforms in Russia, but would also leave Russia without sufficient money for these measures, which are usually very costly. He also noted that the main difference between the current crisis and previous ones lies in the lack of any defaults on international loans among Russian borrowers, and the continued high profile of sovereign debt. Tikhomirov said that although the Russian economy will grow more slowly than other emerging countries, whose governments flooded their economies with money, its growth will be more predictable and driven by fundamentals.
Participants were unanimous that a reassessment of the role of risk management will be the main result of the crisis for Russian borrowers and creditors. It is believed that the quality of risk management will improve, and Russian managers and companies will become more effective.
During the round table, participants discussed the specifics of the growth in social expenses within the context of Russia’s demographic situation and the urgency of systemic reforms. Frank Gill from S&P believes that “the private sector alone cannot be a locomotive for higher efficiency in Russia during the next ten years. Russia is really a unique country in terms of territory, its goals as well as its grave demographic situation.”
Another issue discussed during the round table was the situation in the banking sector. Leonid Slipchenko stated that “the worst has already past for the banking system. The banking sector is very flexible now. There are a lot of opportunities for recapitalization. And, in general, the situation now is much better than it was three months ago.” But Frank Gill from S&P stressed that “credit drivers in the economy are very weak. The crisis should make the banking system more transparent”
A full report on the discussion will be available in the October issue of Institutional Investor.
Institutional Investor is an American magazine and was founded in 1967. In 1997 it was bought by UK-based Euromoney. Currently, Euromoney Institutional Investor publishes more that 100 editions devoted to financial and economic themes. Since its foundation, Institutional Investor has been conducting annual surveys to assess the work of research departments of brokerage firms globally. It is the most respected and well-known publication for institutional investors.
