|
‘Although the media often paints quite a different
picture, nepotism and
corruption have had their roots fundamentally
weakened’
Dr Andreas Gummich, DWS |
Politics won’t spoil the hidden treasure of the russian market
05 April, 2004
As a country, Russia is worthy not only of headlines on the front page
but also on the investment pages. With increased transparency and
structural reforms comes real growth and a better business environment.
The arrest of Mikhail Khodorkovsky in autumn last year and the recent
dissolution of the cabinet highlight the greatest risk in Russia: its
lack of legal and political transparency. This is, however, not unusual
in a developing economy.
We therefore class such a case as a typical “event risk” to which even
positive markets tend to resort to swift overreaction, normally
recovering within a very few days when there are no other negative
repercussions. For example, when Mr Khodorkovsky’s “right hand man” and
head of Menatep Bank, Platon Lebedev, was arrested in July 2003, the
markets initially lost 15 per cent, but within three weeks they added
25 per cent to stand ahead of where they had been prior to the incident.
