Aug. 2 –Foreign investors invested US$103 million into Russian equities last week after an outflow of US$11 million the week before according to the experts at EPFR Global.
From the beginning of this year, the net-inflow of investment into Russian funds totals near US$2.1 billion. ″Judging from EPFR data, optimism has returned to emerging market investors,″ Alpha bank analyst Angelika Genkel said to Russian daily Vedomosti while adding that “after a one week break all major funds have shown essentially positive inflows.”
In particular, the global emerging market (GEM) funds have accumulated US$1.6 billion against US$800 million a week before; inflow to Chinese funds reached US$364 million while Brazilian funds increased by over US$123 million.
″Russian companies are rather cheap in comparison with other developing nations, at least within BRIC countries,″ Fleming Family & Partners department head Andrey Vlasenko said.
The UBS AG analysts also see an “attractive opportunity” in emerging markets.
″The GEM universe looks a lot stronger than the developed world in many respects,” UBS AG strategists led by Nicholas Smithie wrote in a report last week. “We do not think a discount valuation to the world is justified.″
London-based HSBC bank, the top global investor in BRIC countries with more than US$90 billion in assets, has stated its plan to invest further in Russian equities.
“Russia is our favorite,” HSBC’s emerging markets chief Nick Timberlake said to The Telegraph. “We’re being offered a huge opportunity. It is not quite as good as it was after Russia’s debt default in 1998, but it is excellent value.”
Moscow stocks are trading at a forward price to earnings ratio of five, compared to Turkey (7.2), Poland (9.6), China (10), and India (11.7). “Russia is unloved and undervalued. We think valuations will revert. It is more than just a commodity play,” said Edward Conroy, co-head of the HSBC’s Russia Fund.
