Russias domestic economy is providing good growth opportunities especially in resources and automobile manufacturing, says Baring Asset Management.
Despite the conviction of ex-Yukos chief Mikhail Khodorkovsky, BAM believes that President Putins stated intention to reduce the statute of limitations on past privatisation deals from ten years to three years will substantially reduce the risk of new tax claims on Russian companies. This could reduce the equity risk premium for Russian companies.
BAM Russia fund manager Marina Akopian says: “We still see significant opportunities in Russian companies that have a global competitive advantage such as in the oil and gas and metals sector. Russian companies are increasing production and reserves at lower costs compared to global majors and are trading at excessive discounts to global majors, which we feel is unjustified.”