RUSSIA - High oil and gas prices, excessive discounts, underlying economic strength and the potential for further political reform are maintaining a compelling environment for Russian equities, according to Baring Emerging Europe plc.
BEE – an investment trust for private investors seeking capital growth – says the Russian market is trading at “too wide a discount” to international and emerging peers, resulting in real investment opportunities.
Stuart Richards, investment manager for BEE commented: “The positive outlook for Russia means we have over 40% of the fund invested there. We think current growth rate for the economy is sustainable over the next two years. Commodity prices are expected to remain relatively strong as fears of a hard landing of the Chinese economy recede.”
The trust says Russian equities rallied 9.1% over the last quarter from July to September, according to the FTSE Greater Eastern Europe with Turkey index, spurred on by high oil and gas prices.
Richards added: “The strength of the domestic economy is driving economic growth and there has been encouraging evidence of foreign direct investment flows into the country. We also expect the government to return to the reform agenda, albeit at a slower pace than the previous government – when this happens, it will be taken positively by the market.”
BEE is part of Baring Asset Management Limited and was launched in connection with the scheme of reconstruction of the Baring Emerging Europe Trust (BEET).
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