Smart, successful investors in the Baltic States,
Russia, Ukraine and other CIS countries are no different
than smart, successful investors in the United States
and western Europe. Savvy investors in the countries
of the former Soviet Union know how to balance risk
and return, but above all, they take the long-term
view. Without adequate perspective, the ebbs and flows
of stock prices, analysts' forecasts and global developments
can cause the inexperienced investor in the region
to swing from "irrational exuberance" to "irrational
depression."
It is true that the Russian economy is growing faster
than most others around the globe, posting a 5.3 percent
growth rate in 2001 and a predicted 3.8 percent growth
rate this year. The U.S Government finally designated
Russia a "market economy" for the first time in June
2002, a status also recently achieved by Kazakhstan.
The Russian Trading System index is up 25 percent
for the year.
Other countries in the region are also experiencing
strong growth. For example, Latvia's GDP grew by 7.6
percent last year and Ukraine's grew 9 percent. Kazakhstan
saw a double digit rise in GDP – up 13.2 percent in
2001.
These results have led many foreign investors, including
those that abandoned the market after Russia's 1998
ruble devaluation, to again consider putting their
money back into the region. BP's decision to increase
its stake to 25 percent in the Russian oil company
SIDANCO is another important indicator of growing
confidence in Russia's long-term economic prospects.
The PBN Company is proud to serve as strategic consultant
both to BP and to SIDANCO.
But long-time players in these markets caution newcomers
not to step foot into the region without a realistic
evaluation of the risks and a prudent, long-term perspective.
The fact is that most of the economies remain in flux
– with all the associated opportunities and dangers.
This edition of Access PBN highlights sage
advice from two other clients of The PBN Company –
Ruben Vardanyan, president of Troika Dialog of Moscow
and Natalie Jaresko, president of the Western NIS
Enterprise Fund (WNISEF) in Chicago.
First is an opinion editorial authored by Mr. Vardanyan
for The Moscow Times. In it, he encourages foreign
investment in Russia, but warns against "unqualified
optimism." Troika is the largest investment bank and
brokerage in Moscow, and recently led a consortium
that purchased a 49 percent stake in Rossgostrakh,
Russia's largest insurance company. Mr. Vardanyan
is also General Director of Rossgostrakh.
Second is an interview with WNISEF President Natalie
Jaresko that appeared in the Russian newspaper Izvestiya
on investment opportunities in Ukraine and Moldova.
WNISEF, based in Chicago, is the largest foreign venture
fund in Ukraine and Moldova with a shareholder capital
of $150 million.
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