22 November, 2011

Investors are wary of investing in Russia

According to Emerging Portfolio Fund Research (EPFR), in the last week in funds investing in Russia, brought $ 2 million, which is 30 times smaller than the result of last week. Thus, a positive correction, which began two weeks ago, turned out to be insignificant. Uncertainty investors have not contributed to the growth of stock indices: this week they have lost almost 2%.

EPFR data shows that investors have reduced the deposit of funds in the Russian stock market. For the week ending November 9, funds, investment policy which is aimed at Russia and CIS countries, attracted almost $ 2 million, which is 30 times smaller than the inflow recorded the previous week ($ 56 million) and became the first in a long time. Excluding the influx of the last two weeks of almost continuous outflow of funds from the Russian market has been observed for four months, during which investors withdrew more than $ 3 billion In the light of last week, we can say that the positive correction was negligible.

However, the result of Russia's noticeably better than the foundations of a number of other BRIC countries. Thus, the foundations of India for a week lost $ 54.1 million, Brazil - $ 121 million stand apart Chinese funds, which are able to attract the last week of more than $ 544 million As a result, the total inflows into funds that invest in developing countries has declined from the previous week and a half times - $ 2 billion versus $ 3.5 billion, confirming the reduction of perceived was optimism among investors in the background of the transformation of the financial crisis in the EU in the political.

It all started with the fact that last week the Greek Prime Minister George Papandreou announced a desire to make a concerted effort with the assistance of the EU and the IMF for a referendum. The move threw investors around the world in shock (see "Kommersant" on November 2). Under pressure from the public, Mr. Papandreou refused to hold a referendum and asked the members of the current government to be ready to resign as part of the formation of a coalition cabinet. Their willingness to resign on Tuesday announced late in the evening, and Italian Prime Minister Silvio Berlusconi. He said that the resignation may take place in late November or early December (see "N-line" from November 9).

In such circumstances, yield a decade of government eurobonds Italy for the first time in the history of treatment has risen above the level of 7% - 7.5% APR. The level of 7% in the current context is crucial. Earlier in achieving such a mark on the profitability of sovereign securities, Greece, Ireland and Portugal, these countries face the question arose of the receipt of international assistance. Only after intervention by the ECB situation on the sovereign debt market began to stabilize. During today's trading profitability Italian market fell to 6.6%.

EPFR recorded a slight influx of funds into the Russian market could not support the domestic stock indexes. Since the beginning of the week the RTS index fell by 1.9% - to 1513.73 points. The MICEX index lost just 1.8%, dropping to around 1474.84 points. At the same time the leading Asian indices fell 3-3.5%, European - to 1.2-2%, the U.S. - at 1-2,3%. However, the potential for further reduction of the Russian stock market is limited, say market participants. "Given that investment flows from the speculative ETF funds are quite high (for the week, they raised $ 17.5 million, which together with the outflow of $ 15.8 million and gave the final result - almost $ 2 million flow .-" b "), You can say that the volatility of the Russian market for some time remain, - analysts "Uralsib" .- However, after 24 weeks, during which investors are actively withdraw funds from the Russian assets, the bulk of the outflow, in our opinion, have remained behind, and the further potential to reduce the local stock market indices are likely limited. "

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