They would thus act as a stabilizing force

The largest brewery in the world is... Russian. Emergeant of a suburb of St. Petersburg by the stigma of the urbanism of the Soviet era, Baltika Breweries is a modernity to fade to envy his great European rival, the Heineken Group. A surprise in a country more known for fondness natural and inordinate its inhabitants for the vodka for beer. With the Bank, consumer goods are also among the sectors favoured by managers to focus on Russian growth more self-reliant and less dependent on oil revenues.

In addition, "the environment politics, very stable, is not a cause of concern for us in the future." "We will be simply attentive to the choice of Vladimir Putin's successor in 2008 possible," says Angelika Millendorfer, Manager of the Fund Raiffeisen Aktien Osteuropa. Foreign investors for a long time appear thus to have integrated and dédramatisé the vicissitudes of Russian politics and other "cases", which do not appear to unduly disrupt. They see the large reserves of the Russian Central Bank the third in the world a guarantee of additional strength. As investors, for the moment, had little to complain about the many paradoxes and originalities of this country of 140 million people.

Last year, the Moscow stock exchange RTS index, denominated in dollars, up 70.7, roughly double the average of the stock markets of Eastern Europe, becoming in addition the first emerging to exceed 1,000 billion in market capitalization bar market. Since 2001, its performance ( 713) place far ahead of China ( 348) or India ( 229).

A long-term approach

This impressive performance should not obscure the risks associated with investment in a little diversified and volatile market (read box). Investors who believe enough malignant entry and exit of the Russian stock market at the best time would do well to meditate arbitration Hermitage Fund statistics: those who have missed the most beautiful 10 sessions between 1996 and 2005 saw its amputee performance for three quarters. It would be practically reduced to zero was passed next to the fifteen most large increases. In other words, the majority of investors prefer the long-term patient approach with a minimum of five years investment.

The stock market still suffers from excessive concentration with a dozen of major groups, including energy, which represent about 80 of the capitalization of the stock market. It is notably the case of Gazprom, one of the largest global groups and often a must in international portfolios. The latter could provide liquidity to the Russian market as a whole in attracting the attention of foreign investors towards him. "During the first four months of last year, the major Russian flagship values benefited significant flows on the part of international funds." This should not happen in 2007, with more modest and better distributed entries between different segments of the market (large, small and medium-sized companies...) ", says Aivaras Abromavicius, Manager and partner of East Capital. Not less than 50 to 60 introductions on the stock market is expected this year, which should bring more sectoral variety. Problem: their price, often high, consequence of the fierce competition that engage business to lead these operations and the high banks demand that they encounter on the part of the funds.

The latter (open Fund, equity, warrants) were still modest assets at the level of the country of the order of EUR 15 billion. If we add those of the Fund of State Vnesheconombank pension and real estate funds, booming, the total reached 32 billion euros. Local investors, including banks, control about 90 percent of Russian financial assets. Financial institutions such as OAO Bank of Moscow, Alfa Bank, Uralsib, Troika Dialog, or even a manager of assets such as Renaissance share so much of this market, narrow but strong expansion.

"In recent years, Russian investors (banks, management companies, wealthy individuals...). have gained increasing importance. "They can now be a consideration when non-residents decide to suddenly out of the market," notes Aivaras Abromavicius. They would thus act as a stabilizing force.

Only 2 of households have investment funds, the Secretariat, totalling only 3 billion euros in outstanding. But they collect each month between 115 and 150 million euros of subscriptions coming in majority on their market because Russian individuals are unwilling to invest outside their borders but a minority of sophisticated and wealthy individuals.

The long/short strategy

A sharp increase in minority and courted by all. According to the annual survey of Capgemini and Merrill Lynch, the number of millionaires in dollars jumped more than 17 in Russia during the year 2005, at a rate nearly three times faster than at the global level. They invest considerable sums from abroad, including in Swiss private banks.

This market at the phenomenal rate of growth has what sharpen the appetite of foreign management companies such as DWS, UBS, Allianz, Citibank, or Fortis IM, which flooded the Russian market. But for the moment, the success is rarely meet the fact of a very bitter competition with more than 350 Pifs identified. Without a good local partner, the distribution of funds in a country also extended and also fragmented is quickly fatal puzzle. Some funds such as Hermitage, UFG, Firebird, Prosperity or Kazimir arbitration come take advantage of the volatility of Russian values. They most often operate on the long/short strategy, which is to buy and sell securities short. A practice that is possible only on a limited number of values while the options on shares, often expensive, are also liquid for 15 large values.