UK - Russian equities will start to outperform once uncertainty caused by the governmentís battle with oil giant Yukos has been resolved, Pictet Asset Management claims.
President Vladimir Putin’s government has been locked in battles with the oligarchs over tax evasion. However in late July, the Russian justice ministry announced that it intended to seize and sell the oil giant’s key production subsidiary, Yuganskneftegaz.
Billionaire Mikhail Khodorkovsky - Yukosí s biggest shareholder - is currently in prison, facing trial on charges of fraud and tax evasion.
However, according to Pictet, the government’s aim of seizing Yuganskneftegaz has “substantially intensified” the conflict between the state and the company.
Pictet head of emerging markets John-Paul Smith said: “The end game in Yukos now appears to be closer. The more extreme resolution - Yukos being stripped of its key assets and being forced into bankruptcy - looks increasingly possible.”
Smith said that apart from Yukos, conditions remained extremely favourable. “Once the uncertainty surrounding Yukos is removed, and if no other attacks on oligarchs follow, there should be room for a significant upward correction in some selected names.”
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