Foreign Investors Hope Russian Market to Move from Recovery to Growth

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By Marina Romanova

foreign-investors-1936Foreign investment inflow in Russian stock in 2016 showed first positive annual result since 2012 and has exceeded US$727 million, according to the Citibank, which based its calculation on the Emerging Portfolio Fund Research (EPFR) data. In 2012 foreign investors injected US$410 million in Russian assets. The last year results are also a record high since 2010, when foreign investments were amounted to US$3.3 billion.

Russian stocks were up 16 percent since November, 8th, 2016 based on the performance of the RSX Van Eck Vectors Russia ETF (U.S. first exchange-traded fund focused on Russia), while the other emerging markets are down 6 percent collectively, as measured by the iShares MSCI Emerging Markets ETF EEM.

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Russia Exports to China Booming After Sanctions

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Op-Ed by Chris Devonshire-Ellis

russia-exports-to-china-2016Bilateral trade between Russia and China significantly improved during 2016 as China began to step into place as an alternative supplier to the European Union as sanctions continued to bite. President Putin has used the opportunity wisely and in fact lessened Russian dependence on EU imports. He has also paid down Russia’s debt  at the same time.  The damage caused by sanctions have impacted instead rather more on the EU. New public transport infrastructure in Moscow and St.Petersburg such as buses and trains for example are now sporting Korean and Chinese manufacturer logos instead of European. GDP growth is returning in 2017, with the World Bank anticipating a 1.5% growth this year, coincidentally the same growth rate as can be expected in the EU. In fact the Russian economy is now expanding, while the EU’s is contracting. The sanctions have also been a boom for Sino-Russian trade, which has significantly picked up over 2016.

As can be seen in the attached graph, Russian trade and exports plummeted following the introduction of sanctions, but is now recovering to pre-sanctions levels. The EU’s loss has been China’s gain.

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Russia-China Cooperation: Too Well-Matched Not to Integrate

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By Marina Romanova

russia-china-cooperation-too-well-matchedOn the cusp of 2017, Sino-Russian political relations are still ahead of two nations’trade and economic cooperation.

Russia’s worsened relationship with the west after the annexation of Crimea has further pushed Russia’s leadership into China’s arms.In 2014, European Union-Russian trade stood at US$377 billion, making the bloc Moscow’s most important economic relationship. That fell to US$235 billion last year.

After Western sanctions were imposed in 2014, Moscow and Beijing had declared that they would increase their bilateral trade to US$100 billion during 2016 and to US$200 billion by 2020.

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New Issue of Russia Briefing : Implementing Internal Audit Policies in Russia

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rb_2016_12_implementing_internal_policies_in_russia_-_coverThe new issue of Russia Briefing is now available as a complimentary download, and discusses internal audit, covering topics including health and safety standards, compliance, HR standards, and security regulations. A couple of years ago, legislation introduced obligatory internal controls for each and every company operating in Russia. An internal audit is the ideal tool for checking whether a company has not only set up such rules, but also adheres to them in its daily business operation. This issue was produced by the Schneider Group in Moscow in collaboration with Dezan Shira & Associates.

To subscribe to Russia Briefing and our Asia Briefing series of magazines, please click here

For assistance with foreign investment into Russia, please email russia@dezshira.com

 

Russia and India to Boost Economic Cooperation and Trade

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By Marina Romanova

prime-minister-narendra-modi-and-russian-president-vladimir-putinIn a way to re-establish “the special and privileged nature’ of their strategic partnership, Russia and India have set the goal of boosting bilateral trade to US$30 billion and mutual investment to US$15 billion by 2025.

However, Russian-Indian trade cooperation leaves much to be desired. For Russia, India is in 19th place in terms of turnover, according to 2014 data, while for India – Russia is in 34th place only. In 2015, this turnover was further reduced by another 18 percent which is, as Russian president Vladimir Putin phrases it, “largely associated with volatility on the global markets and in exchange rates”.

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Russia and Vietnam Aim to get US$10 Bln in Bilateral Trade by 2020

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By Marina Romanova

russia-and-vietnam-aimIn May 2015, after six years and eight rounds of negotiations, Vietnam signed a free trade agreement (FTA) with Russia-led Eurasian Union (EU). Although, it took another 17 months for the deal to finally come into force in October 2016, Vietnam became the first and only country so far to establish a free trade zone with EU, comprise of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
Many observers believe FTA with Vietnam was possible due to special historical ties between two states.

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Credit History Exchange to be Introduce in Eurasian Union by 2018

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By Marina Romanova

credit-history-exchangeRussia’s central bank is discussing the agreement on credit history exchange between Eurasian Economic Union nations to allow citizens of Russia, Kazakhstan, Kyrgyzstan and Armenia to get loans in various financial institutions within the Union, Russian business daily Kommersant reports.

The Agreement on exchange of information was adopted and enforced by the working group of the Financial Markets Advisory Committee of the Eurasian Economic Commission (EEC) on October 21, 2016. The main goal of the arrangement, as it defined on EEC website, is “to create conditions for free capital flow in the financial markets of the Union states, to ensure access for residents of member states to credit products in banks throughout the EEU and reduce credit risks for banks of the Union States.”

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From Russia with Caviar and VAT

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By Marina Romanova

caviar-and-vatStarting from January, 1 of 2017 Russia may introduce VAT refund to allow foreign visitors obtain a refund of 18 percent value added tax on certain purchases, Russian media reports.

Earlier on November, 10 first Deputy Prime Minister Igor Shuvalov has ordered Ministry of Finance to submit a bill for introducing tax-free system in Russia, Shuvalov’s secretariat told journalists. According to Deputy Prime Minister, VAT refund for foreign visitors will increase the flow of tourists and enhance goods turnover.

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LinkedIn Banned in Russia

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By Marina Romanova

linkedin-banned-in-russiaSince Friday, November 17 LinkedIn is officially blocked for around 6 million Russians, who have accounts in the world’s largest job searching engine. Russia’s Roskomnadzor communications watchdog, told Interfax news agency on Thursday that the website would be blocked within 24 hours, and a number of Internet service providers appeared to have immediately begun blocking the website, according to media reports.

LinkedIn, which has its headquarters in the United States, is the first major social network to be blocked by Russian authorities, setting a precedent for the way foreign Internet firms operate.

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Russia’s Re-Alignment Under Trump & Putin Equates to Silk Road Opportunities

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By Chris Devonshire-Ellis

silkroute-mapWith the American President-elect Donald Trump seemingly rather more disposed to engage with Russia President Putin, the mainstream media has continued its confused stance about handling or understanding what is happening within Russia and the mindset of President Putin. A decade of flawed foreign policies towards Russia have left the Russians a nation under US and EU sanctions, military tensions, and fundamental differences about handling international terrorism. These have been compounded by Russia’s annexation of Crimea and the continuing unsettled environment in the Ukraine.

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