Russia’s investment appeal 2nd lowest- report

The appeal of investing in Russian markets is waning, ranking second-lowest among the top 2013 investment markets, according to a panel of 730 world-wide investors questioned in an Economist Intelligence Unit survey.

In the top investment markets, only the Persian Gulf ranks below Russia.

A similar survey by Rosvault Business also puts the Russian Federation second-last. 

In first place was the US, as 45% of the panel placed their confidence in the red, white, and blue asset markets. Second was China with 42%, and in subsequent places are South-East Asia, Brazil, India, and Japan.

EIU Key Findings

- Global investors are still bullish on China, but favor the US and other emerging markets. When asked to choose the 3 best regions for asset price growth, 46% chose the US, 42% China, and 34% South-east Asia, 30% Brazil, 27% India, and 19% EU

- German investors (52%) chose the EU as the number one region for asset price growth

- UK investors are the most pessimistic about economic and investment prospects in the EU. Only 4% of UK investors think the EU has strong economic growth prospects

- 2013 showed a shift in portfolios away from commodities to telecommunication and service sectors

- 65% of global investors believe rising income disparities pose a great threat to global capitalism

Only 12% of respondents considered Russia a good place to invest in light of the potential growth in the value of assets, reports Lenta.ru.

Oil and gas revenue reserves helped Russia shoulder the 2008-2009 crisis, but now the vulnerability of falling oil prices, a slowing economy, and a shady business environment that lacks transparency have all dragged down direct foreign investment.

So far this year, $1.2 billion has fled Russian equity funds, an estimated 8% of Russian assets.

The loss of direct foreign investment has particularly crippled the Russian economy, but venture capital investment has more than doubled year-on-year to $910 million in 2012, Vedomosti reported, citing research by Russian Venture Company (RVC) and PricewaterhouseCoopers (PwC). There were 201 venture capital deals in Russia last year, up from 2011. According to PwC, 160 funds invested in Russian startups last year.

The Economist Intelligence Unit will present the data on Thursday at the Dorchester Hotel in London, as part of the Bellwether Series, a global conference series in the UK and Asia in 2013.

Nearly 72% of investors expect global expansion this year- a significant increase from the 57% from the 2012 survey.

Many are betting on a strong Chinese and US recovery. A majority of investors also agree that income disparities are a major threat to global capitalism, long-term.