Russian part-privatisation may trigger equity upswing: East Capital

Partial privatisations in Russia may be in the pipeline, leading to an upswing in the equities market, Peter Elam Håkansson of East Capital has argued.

Håkansson, head of the public equity team at the independent asset manager which focuses on Eastern Europe and China, foresees partial privatisation at Sberbank, VTB and Rosneft, among others. This will reduce state involvement and lead to an increase in available shares.

Håkansson believes that the Russian stock market will see a further increase in the wake of Putin’s election. Russia’s new leader will be building his new administration in just over a month’s time, and liberals are expected to be placed in key positions following widespread public protests. Fighting corruption is expected to be the main focus of the government.

Håkansson points out that though Russia is generally valued at a discount of approximately 50% against other emerging markets, this has not always been the case: in 2006 and 2007 the difference in valuations of Russian shares was only 10-15% compared to other emerging markets due to a record breaking number of Russian company listings.

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