Russia has finally joined the World Trade Organisation after 19 years of negotiations and lower trade barriers should help modernise the Russian economy, according to fund manager Invesco Perpetual.
The fund manager said that WTO membership should have a positive impact on real GDP, wages and household income in Russia, and make the country more attractive for foreign investment. Invesco Perpetual fund manager, emerging markets, Liesbeth Rubenstein, commented: “Russia controls a significant share of the global reserves of natural resources, as well as being the world’s largest exporter of energy. This brings huge financial benefits to the country as a steady flow of substantial export revenues boosts government finances as well as giving support to the corporate sector.”
She added: “With the presidential elections in Russia concluded, we believe that the pace of structural reforms in the country is likely to quicken.” Another positive should be consumer growth, as the middle class (defined as an average monthly disposable income over £700) increases in size from its current base of 20 million to over 66 million by 2020. “This should provide investment opportunities in areas such as modern format retail, consumer goods, financial services and the development of the healthcare system.” Rubenstein said. In terms of valuations, she said Russian equities are now at extremely low values in historical terms and are at a discount to other emerging markets. In addition, it currently enjoys strong fundamentals, making it better prepared to deal with major external events such as Greek exit from the Eurozone. She concluded: “So long as the cycle of reinvestment continues and the macroeconomic fundamentals remain strong, we believe that we will continue to see investment opportunities in the region for many years to come.”