Investors are fleeing Russia and they are losing billions of dollars
As Investors Flee, Russia Inc. Is Feeling the Pain
By Carol Matlack March 17, 2014
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Even as Europe and the U.S. have refrained from imposing all-out economic sanctions,
Russian companies are suffering as investors flee the country. Canceled IPOs, suspended loan negotiations, plummeting share prices—all are part of an estimated $50 billion in private investment that has left Russia since Jan. 1, according to economist Neal Shearing of Capital Economics in London.
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Businesspeople “are very scared,” Alexander Lebedev, who owns the Moscow-based investment group National Reserve, tells Bloomberg News.
“There could be margin calls, reserves might be drawn down, exchange rates may fall, and prices will rise.”
And yet, business leaders have remained almost entirely silent, as the Kremlin in recent years has tightened government control of the economy.
“The business community is freaking out—they’re terrified,” says Ben Aris, the editor and publisher of Business New Europe in Moscow, an online journal covering business and finance in the former Soviet bloc.
Ordinary Russians also would be hurt by capital flight. If
the outflow continues at its current pace, it will total $70 billion during the first quarter, some 3.2 percent of gross domestic product. “There is a real risk that this could push Russia into recession this year,” says Capital Economics’ Shearing. Adding to the pain,
the ruble has plunged 22 percent over the past year—a blow to shoppers in a country where imported goods account for more than 40 percent of consumption.
Read more:
http://www.businessweek.com/articles/2014-03-17/as-investors-flee-russia-inc-dot-is-feeling-the-pain
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