02
Business
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RG.RU
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www.russianindexes.com Russian Industrial Leaders Index
THE DAILY TELEGRAPH THURSDAY_OCTOBER 25_2007
www.kommersant.com Russian national business daily
Equities An American analyst takes a good look at the market News brief Business in Moscow
Are Russian
Norilsk Nickel buys 100pc stake
of LionOre
RBTH answers
Russian-based Norilsk Nickel, the world’s lead-
ing producer of nickel and palladium, has closed
readers’ questions
a deal with Canada-based LionOre for $4.8bn,
equities attractive
making it the largest acquisition by a Russian
company outside Russia. LionOre is a nickel and Q: How affordable is office language because Russian is
gold producer operating in Australia, Botswana space in Moscow? a phonetic language – the
and South Africa. A: Commercial real estate is words are pronounced exact-
developing rapidly as foreign ly the way they are spelt.
companies come into the city
to investors?
Investment Forum results in $22bn
and local ones expand. Q: Is it hard for an MBA
in deals for Sochi
More and more office build- graduate to find a job in
ings are going up both in Mos- Russia?
Sochi (pictured below), site of the 2014 Winter cow and outside the city lim- A: The job market is a typical
Olympics, has received more than $22bn in in- its, while older buildings are case of the classical supply-
vestments, most of it centred around construction being renovated to fit modern constrained model: robust
projects for hotels, entertainment and shopping needs. economic growth resulted in
Cameron Brandt, senior structures, rates of economic tor emerges the winner, via opportunities. So, for foreign centres. The 6th Investment Forum attracted With such a high demand, the shift of the demand curve
market analyst of the US growth in key markets etc. due process, from some of the investors with a short-term 10,000 Russian and foreign businessmen. prices remain steep and can which, in turn, resulted in a
global fund tracking firm EPFR, Russian companies are begin- inevitable conflicts between outlook, it has plenty of at- be as high as $1,000 per square higher equilibrium price (ie
explains what he thinks ning to generate this informa- businesses and governments, tractions. I would be inclined,
Gazprom closes a gas debt deal
metre in central locations. higher wages).
about current investment tion. But, in many cases, cred- investors are going to have though, to turn this question
with Ukraine
Major Russian firms are try-
opportunities in Russia ible figures stretch back only real reservations. around and ask what kinds Q: How common is credit card ing to fill positions in bank-
two, three years. So a lot of of investment are attractive Ukraine has agreed to repay its gas debt of fraud in Russia? ing, finance, marketing, busi-
How can Russian companies in- decisions still boil down to How would investors react if to Russia. Direct, fixed in- nearly $2bn to Russian state-owned Gazprom A: While credit card fraud is ness development, public re-
crease their popularity among three things: what’s the out- government-owned companies vestment that brings new by November 1. The deal comes after Gazprom’s on the rise, with 1,000 cases lations and other fields by of-
investors? look for the price of the com- listed their shares on global ex- technology into Russia and threat to cut its gas supply to Kiev. reported in the first half of fering British and American
Given the buzz about BRIC modity they’re selling, what’s changes? creates employment is, so 2007, it is still significantly MBA graduates attractive
(Brazil, Russia, India, China) their valuation compared to Foreign investors have been that will continue to get a lower than the global aver- compensation packages and
funds, more US institutional other emerging markets’ looking for companies with modicum of official support
Senator goes into Parisian
age. career growth opportunities.
and mutual fund money is peers, and what’s the right direct or indirect links to the and protection. But keeping
grocery business
This in part is because of the Higher salaries are partially
likely to find its way into risk premium. But that is state, since that’s viewed as equity investors happy is, de- low use of cards by Russians offset by Moscow’s high cost
Russia: flows into the BRIC changing. some guarantee against a spite the official pronounce- Luxadvor, a company controlled by Russian sen- – only 3pc of personal ex- of living, but international
and single country funds in- Yukos-style assault by the ments, not a high priority. ator Sergei Pugachev, has bought Paris-based penses are paid by card. Visa experience, adventure and a
vesting in these markets are What do Russian companies tax authorities. Providing They are seen as predomi- Hediard Groceries. Established in 1854, Hediard reports that cards make up bit of glamour still draw
responsible for about one- have to do to attract more in- those companies pass muster nately foreign outsiders is a gourmet food company with five shops in only 7pc of all commercial young business people to
third of the inflows into all vestors? And what do you think on conventional grounds, Paris and more than 200 around the world. transactions in Russia Russia.
emerging markets’ equity most deters investors? such as profitability, they are What do you think will happen against 64pc in the UK.
funds that we track despite At the microeconomic level likely to get a decent recep- with Russian equities in 2008 Q: Is there a bias against
the fact that they currently they need to keep doing what tion if they list overseas. when there will be a presiden-
Starbucks heads for Old Arbat
Q: Do I have to learn Russian women in business?
represent just 19pc of the they are doing. The longer tial election?
Street
to do business in Moscow? Though there is no visible
total assets in those funds. and clearer their financial How much private investment Unless there is a great deal of A: It is nice to know some bias against women, men
track record, the more com- has the US made in Russia? clarity about Putin’s succes- The first Russian Starbucks opened in a shop- Russian, but most Russian make up about 80pc of top
What percentage of investors in fortable investors will be- If you mean venture cap- sor the market will almost ping mall outside Moscow. The company plans businessmen speak English. management. But this is
the US have invested in the Rus- come. From a top-down per- ital-style investments, it is certainly consolidate ahead to open a second store on historic Old Arbat There are plenty of Britons changing: for example, two
sian equities? spective, they need to find a European-based firms that of the election. The state is the Street in Moscow later this year. and Americans who are ministers in the new govern-
Directly, 2-3pc. Indirectly, way to lobby for a better reg- are leading that particular dominant force in the Rus- doing business with immense ment are women. In a young-
via mutual or pension funds, ulatory environment and a charge. Some US firms are sian economy, so a change success without speaking a er generation of business
closer to 20pc. stronger legal system. That’s making investments in East of leadership could radical- word of Russian. For in- people, women make up as
especially true for second- European firms that they ex- ly change current assump- stance, the founder and head much as 50pc, so in a few
What statistical and economic tier companies that don’t pect will expand into Russia tions. But as long as the suc- of Afisha Industries, pub- years the top management
indicators are investors look- have the visibility and clout – a proxy approach. cession appears orderly and lisher of a popular city list- female/male ratio is likely to
ing at when they consider Rus- of the energy majors. the campaign rhetoric isn’t ings magazine, was an Amer- even out.
-
sian equities? The idea that a company like Russia attractive to investors? too nationalistic or too full ican businessman who did
They are looking for the same Yukos can be renationalised Reading the Western press, it of ideas for ways to spend the not speak Russian. Please ask questions and
indicators they use in other by way of arbitrary tax bills seems doubtful. so-called Stabilisation Fund, However, if you stay in the share your experience of
developed markets: free cash is still very much on people’s Like any economy undergo- there shouldn’t be a whole- country long enough, you doing business in Russia:
flow, pricing power, cost minds. Until the private sec- ing big shifts, Russia presents sale retreat.
-
VLADIMIR VYATKIN_RIA NOVOSTI will certainly master some business@readrussia.com
Stocks to watch in November Figure of the month
Mechel (MTL) CTC Media (CTCM) VimpelCom (VIP)
63,840
Mechel is an integrated mining and steel company. Its mining business is CTC Media Inc operates the CTC Network, a Russian entertainment VimpelCom, the leading mobile telephony provider, looks like the most
focused on mining products used in the production of steel, primarily cok- television company targetting six- to 54-year-olds, and the Domashny attractive Russian telecom stock, according to Alfa Bank Research. “Its …foreign students are studying at Russian univer-
ing coal, iron ore and nickel. Mechel also produces a significant amount (Home) Network, aimed at 25- to 60-year-old female viewers. In April sustainable ARPU growth in Russia and high exposure to the CIS, togeth- sities. Russia’s higher education is considered
of steam coal. Its business consists of two segments: mining and steel. In 2006, CTC Media Inc acquired a 51pc interest in two stations in Barnaul, er with the possibility that it will enter new markets, provide consider- to be of the highest quality, while tuition costs re-
September, Mechel acquired 100pc of the Temryuk Sotra seaport shares and a 100pc interest in a station in the city of Samara. In February this able upside for investors,” says Alfa Bank. “Voice and VAS usage growth main low compared to Britain.
and most recently it acquired 75pc less one share of Yakutugol and year it also acquired a 100pc interest in a station in Rostov, and is be- will likely result in 2008 revenues at least 10pc above the current market
68.86pc of Elgaugol, two major coal producers. coming one of the leading television networks in Russia. consensus.”
Job of the month
INVESTORS’ RELATIONSHIP DIRECTOR IN AN
ESTABLISHED BANK
$8,000 MONTHLY SALARY
The competition between banks in Russia has cre-
ated a pool of lucrative job opportunities. Banks
are recruiting experts and professionals for posi-
tions still relatively new to Russia and so these are
SOURCE: WWW.RUSSIANINDEXES.COM
more suited to candidates from the West.
Industrial leaders index (RUXX) Large Cap Russian companies Sector breakdown of
Index of Russian companies traded on UK and US exchanges. traded in the US and UK companies traded on US
Calculated and disseminated by Dow Jones Indexes
and UK exchanges
SOURCE: WWW.RUSSIANINDEXES.COM
NAME TICKER
MARKET_
CAPITALISATION
Gazprom ADS lLOGZD 58,580,521,853
Lukoil Holdings ADS lLLKOD 52,258,590,720
Surgutneftegaz JSC ADS lLSGGD 38,553,099,844
Unified Energy System of Russia GDR lLUESD 18,289,970,371
Evraz Group S.A. lLEVR 17,852,926,638
Rosneft GDR lLROSN 13,970,941,925
RUSSIANINDEXES.COM
Mobile Telesystems ADS MBT 13,047,608,174
X5 Retail Group N.V. GDR lLFIVE 12,945,513,090
Vimpel Communications ADS VIP 8,814,838,458
Novatek GDR lLNVTK 7,910,184,391
Tatneft GDR lLATAD 7,073,296,376
Sistema JSFC lLSSA 5,559,172,000
VTB Bank lLVTBR 5,161,200,000
Rostelecom ADS ROS 3,700,686,583
Norilsk Nickel Mining & Metallurgical Co. ADR lLMNOD 3,426,054,105
Severstal JSC GDR lLSVST 3,261,203,741
Novolipetsk Iron & Steel Corp. GDR lLNLMK 3,247,130,519
Comstar United Telesystems GDR lLCMST 2,321,632,221
Sistema-Hals JSC GDR lLHALS 2,310,721,364
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