© Reuters. Foreign investors in the year 2017, rely on Russia
Investing.com − Foreign investors hope for a revitalization of economic growth and consumer demand in Russia, after two years of recession. Even after almost 49% growth stock index and a 44 percent growth of the bond markets in the year 2016, analysts and the Manager of the Fund with a positive growth potential of the Russian market.
So, the Russian assets appear among the Top investments of the year 2017 according to Deutsche Bank (DE:), Goldman Sachs, UBS, JPMorgan, Rabobank, and BofA Merrill Lynch, among others.
At Goldman Sachs in predicting that Russia is in this year “of the restoration on the Phase of growth”.
The data showed that industrial production in Russia grew in December at the fastest pace since March 2011, it is a signal to the output of the world economy from the recession and the transition to growth.
The prices of crude oil in the year 2017, amounting to an average of $57 per Barrel, according to the forecasts of analysts surveyed by Reuters, which is $10 more than in the year 2016. And to increase if the Central Bank is reaching the target Inflation rate of 4%, the purchasing power of Russian citizens.
There are two other factors that optimism.
The first is the victory of the Republicans Donald Trump of the US elections on may 8. November, promises to improve relations with Russia and the likely easing of sanctions against Moscow after the annexation of Crimea in 2014. In addition, the Russian госхолдинг rosneftegas has an agreement with the sovereign Fund of Qatar and trader Glencore (LON:) on the sale of 19.5% of oil company Rosneft (MCX:) for $11 billion-Deal confirms the attractiveness of Russia for international investors.
“I like Russia, according to some very simple reasons: the most obvious of which –Trump, since the sanctions will be lifted,” said Luca Paolini, chief strategist Pictet Asset Management. – But everything is a bit more complicated. It is one of the few emerging countries where, as we think it is a decent potential for growth in almost any scenario”.
One of the most important news of the last week, the extension of the list of sanctions of the administration of the incumbent US President, Barack Obama. Washington accused Moscow of meddling in the electoral process as a result of Cyber-attacks and the pressure on the American diplomats. The Ministry of foreign Affairs announced the 35 expulsion of Russian diplomats from the United States within 72 hours.
But many believe that Trump cancelled sanctions, as soon as you take office. The inauguration of the new President will take place on 20. The decision of the Russian President Vladimir Putin not to U.S. diplomats distribute as a response, Trump met with approval.
If you do not take into account policy, Russia looks very attractive in comparison to many other large countries with emerging economies. In contrast to countries such as Mexico or Turkey, Russia, the positive balance of the balance of payments, which makes it less prone to the growth of the global increase in the cost of borrowed funds.
Investors will also be sympathy for the Russian bonds, as the Inflation, the reduction of the key rate of the Central Bank of 150-200 basis points next year can bring. It is the real rate of return bonds (inflation is adjusted for) on one of the highest levels in the world. Strategist, BofA Merrill Lynch David, in predicting that the ruble bonds bring at least a 10% return in the new year, against the zero-returns of sovereign bonds of developing countries as a whole.
For investors, the currencies of countries with low interest rates and buy high yielding paper, the Russian ruble is one of the most important bets. The analysts of UBS Group believe that the Operation can EMEA bring-carry – trade with the ruble, potentially up to 26% of profit in the next twelve months-the most among the developing countries in the Region.
But some observers are skeptical. Analyst at VTB Capital Maria Колбина, for example, says that the real income of Russians should rise 5-7% per year for several years, the demand of the consumer recovers to pre-crisis levels.
Russia lags of the developed and even in many developing countries, on the level of cooperation of the economy with the state, the Anti-corruption legislation, transparency of government and of society, and the economy remains heavily dependent on exports of oil. A recent report of the monopolies Commission showed that state ownership in the Russian economy,%since 2005, up to 70.
But Paolini of Pictet Asset Management, says that the prices for Russian assets to reflect values of these problems. Russia historically trade at a discount to other emerging countries, and also to the growth in the year 2016, the coefficient of PE (the market price of the shares of the company/net profits) remains a half less than the average of emerging countries. In Russia 6 RE is in Brazil to 14, said Paolini.
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