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Buzz Barometer: Inside Russia Calling! Forum
October 4, 2014 11:57

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VTB Capital’s event, attended by the Russian president, has drawn hundreds of investors from around the world as Moscow scrambles to fights capital outflows amid several rounds of sanctions over its alleged role in the Ukraine crisis.
Many Russian media outlets pointed out the conference produced no big news but many media in the West and in Asia found a positive and a negative side to many of the statements made by high-ranking speakers.
Live Trading News, an Asian outlet, focused on the Kremlin’s promise to hold on to open market economy and not to introduce any capital controls to prevent capital flight (a pledge emphasized by Bloomberg) that has plagued the Russian economy for so many years now.
The Washington Times also highlights the government’s intention to support those sectors that have been hit by international sanctions.
In a rare moment of self-criticism, the newspaper quotes Putin as saying that “the sanctions, imposed by the United States, the European Union and others over Russia’s role in the Ukraine conflict, violate basic principles of the World Trade Organization and obstruct international economics.”
BusinessWeek and the Los Angeles Times dug deeper for negative signals:
  • capital outflow is expected to reach $100 billion this year
  •  Russia’s dollar-denominated RTS Index is the third-worst performer of 93 global equity indexes this year (Bloomberg)
  •  the ruble is at a record low versus the dollar
  • ten-year government bonds little changed, with the yield at 9.43 percent.
Many foreign firms have been forced to close down or curtail their operations, including US oil giant ExxonMobil which had to at least temporarily pull out of joint ventures with Rosneft, said the LA Times.
The newspaper also mentioned the Yevtushenkov probe and the government’s desire to move away from the US dollar in transactions to the Russian rouble. According to Andrey Kostin, CEO of VTB, it could be done within "two to three years”.
The organizer of the event, VTB, “whose first-half profit plummeted, last month tapped the government to boost capital,” said BusinessWeek. Andrey Kostin complained that the bank lost 26 billion roubles ($656 million) in Ukraine since the start of the year, “losses that may double by the end of the year,” he added.
“The Moscow-based investment bank, which has offices in London, New York, Hong Kong (700) and Singapore, is hiring more bankers focused on Asia and will be relocating some staff from London to cover Asian activities,” said BusinessWeek’s report.

VTB has already made progress in Asia lending to companies and helping to organize bond sales. It was named this month as a bookrunner on a bond for China’s Powerlong Real Estate (1238) Holdings. In August, it helped organize a $125 million high-yield bond for Redco Properties (1622) Group, a Hong Kong-listed company. 

Author: Mikhail Vesely

Tags: Russia Calling Rosneft Bashneft VTB VTB Capital 

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