Risks and Rewards in Russia

Source: investorschronicle.co.uk  (8/21/08)

Today, Russia no longer fuels the imagination of spy thriller writers or space race enthusiasts, but is popping up on investor radars due to the country's attractive investment prospects.


Until the recent war with Georgia, the West's fixation with Russia was being fuelled by the country's attractive investment prospects. While some ethical investors may choose not to support the political regime with their money, the interest is bound to hold. But, as we have recently been reminded, this is not a country for the fainthearted. You are dealing not only with economics but politics, too. It remains an unpredictable and risky place to put your money, albeit one with huge potential.

When the late US President John F Kennedy was asked by Life Magazine to list his 10 favourite books, Ian Fleming's 1957 James Bond novel, From Russia with Love, was the only work of fiction included. Today, Russia no longer fuels the imagination of spy thriller writers or space race enthusiasts, but is popping up on investor radars due to the country's attractive investment prospects.

As the western economies stumble under empires of debt, Russia is largely unaffected by the credit squeeze. That's because it is virtually free of consumer debt and, as the world scrambles for natural resources, it also boasts a wealth of oil and gas reserves.

Meera Patel, senior analyst at Hargreaves Lansdown says: "Russia has built up a stabilisation fund of $160bn (£84bn) through the revenues it receives from its oil and gas, making the economy far more stable than the UK is at present."