Russian Business Week 2012: Round Up

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Russian Business Week 2012: Round Up

Russian Business Week, a conference that is held every February in London, summons politicians, businessmen and academics to talk about the economic climate in Russia. Given the turbulent situation in Russia after the December parliamentary elections and in anticipation of the presidential elections in March, this year’s 5th conference – couldn’t be timelier

Stephen Dalziel, Executive Director of Russo-British Chamber of Commerce,debated the prospects and challenges of business cooperation between the two countries. One of the major issues is a conservative perception of the Russian market – the so-called “hangover from the 1990s” in the British media. Looking back to the mid-1990s is often an obstacle to seeing opportunities. However, Mr Danziel mentioned that studying that time is essential to understanding the current state of things.

Sergey Sinkevich, Vice-President of MICEX-RTS, claimed that the stock exchange has strong ambition to get into the global top-5. Attracting foreign investors is more a matter of infrastructure than international PR. Being the largest in Eastern and Central Europe, the Russian stock exchange has yet to complete the strategic programme on bringing business practices in line with international standards, as well as becoming an attractive IPO/SPO venue. Mr Sinkevich also mentioned domestic institutional demand as a powerful source of capital: at the moment 84.4% of pension funds assets are concentrated in low-yield bonds due to regulatory limitations and less than 0.7% of local pension funds are invested in equities. MICEX is actively involved in development of new legislation which would stimulate institutional investment into the equity market. Along with legislation, it is also essential to work on improving the exchange’s infrastructure to expand the investor base and make successful IPO/SPOs of Russian companies in the local market. 

Erik Berglof, Chief Economist of EBRD, expanded on key obstacles to doing business with Russia (and ways to overcome them) in his speech on the Eurozone crisis. Along with tax rates and access to finance, one of the top obstacles according to EBRD research is the insufficient workforce skills: what universities teach is not always what the market demands. Skills constraints influence crisis recovery. Despite certain challenges, success is a low-hanging fruit: many CIS countries can stimulate rapid expansion if they manage to implement basic reforms. 

Neil Mackinnon, Global Macro Strategist of VTB Capital noted that “Russia has done more good to its image by hosting the World Cup 2018”. He also mentioned that Russia cannot be referred to as an emerging economy anymore – it is beyond that phase. In 2001 Jim O’Neill (Chairman of Goldman Sachs Asset Management) coined the acronym BRIC; now a group of countries identified as Growth 8 also includes Indonesia, Turkey, South Korea, and Mexico, along with Brazil, Russia, India and China.The Growth 8 will be driving world GDP.

Oleg Preksin, Vice-President of Association of Russian Banks,was one of the major speakers of Russian Business Week, covering numerous issues and concentrating on evolution of the monetary system, mentioning an idea of “new OPEC” – an organisation of foreign currency holders that could ensure more responsible macroeconomic policy and help to avoid market over-sensitivity. 

Shamil Yenikeyeff, Oxford Institute for Energy Studies revealed some research results regarding oil and gas prospects in 2012-2015 and emphasised the importance of taxbreaks for oil and gas production in East Siberia and the Arctic. Danny Corrigan (Managing director of Rouble business at ICAP) analysed the process of Moscow becoming an international financial centre. The conference was wrapped up with the presentation of Yuri Kotler, Head of Personnel Reserve Project of “United Russia”, on the methods and practice of shaping the national talent pool. 

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