10 Updates

Will China Save Russia With Investment?

May 15 2014, 5:24am CDT | by

Western capital has shunned Russia – officially to the tune of at least $50 billion, according to Russia’s own ministries, but anecdotally perhaps four times that much. And while Russia likes to...

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10 weeks ago

Will China Save Russia With Investment?

May 15 2014, 5:24am CDT | by

Western capital has shunned Russia – officially to the tune of at least $50 billion, according to Russia’s own ministries, but anecdotally perhaps four times that much. And while Russia likes to think of itself as largely self-sufficient, it’s not entirely true, not when there’s infrastructure to be built, and a World Cup to host, and commodities to sell. It needs investment. So who can it go to when it’s annoyed everyone else in the world through its behaviour in Ukraine? It can go to China.

Yesterday I interviewed Sean Glodek, Director of the Russian Direct Investment Fund; as revealed in my exclusive story for Emerging Markets this morning, he disclosed that Russia and China will announce four joint investments next week at the St Petersburg International Economic Forum. These four deals will be in Russia infrastructure, real estate and minerals, and will be made through a vehicle called the Russia-China Investment Fund.

This fund, seeded with $1 billion apiece from the RDIF and China’s sovereign wealth fund, the China Investment Corporation and with the hope of further expansion to $4 billion of assets, actually dates back to 2012, and these deals have clearly been a long time coming together (only one previous deal has been done from this venture, a $200 million investment in Russia Forest Products, a forestry company in Siberia). But the timing, from Russia’s point of view, could not be better:  an illustration that capital will still come to Russia no matter how much it has riled the west.

Glodek said that so far 10% of the fund’s capital had been deployed, and that “including the deals that we will be announcing, we would get to another 15% to 20%” of total assets being invested. This suggests up to $400 million of new investments will be announced next week. They are likely to focus on the Russian Far East, since that’s the area with the closest geographical and infrastructure links to China, although CIC has also previously invested in Moscow Exchange, outside the joint venture structure.

China-Russia investment has actually been surprisingly modest to date. “It’s actually more words than actions so far,” says Vladimir Kolychev, chief economist for Russia at VTB Capital. “If you look at FDI it’s been pretty small both ways: from China into Russia accounts for only $2 billion over the last five years, and Russia doesn’t have any meaningful FDI into Russia.”

But that’s not the full picture, as cooperation between the two doesn’t necessarily take the form of FDI. A huge deal was struck between Rosneft and China, for example, that involves a reported $70 billion upfront payment from China to Rosneft. RDIF told me, in written communication after my interview with Glodek, that trade volumes between China and Russia are expected to hit $100 billion in 2014, a year ahead of a target set by leaders from the two countries; and that China has promised to pump $20 billion of investment into domestic projects in Russia, focusing on transport infrastructure, highways, ports and airports. RDIF also said that China was aiming to increase investment in Russia four-fold by 2020.

Glodek said that co-operation between China and Russia through the venture and other co-investments dated back several years now, and that the timing of the deals, just as Russia is being starved of western capital, is a coincidence. “But I would agree there is more focus in Russia to explore opportunities with China, and with Asia in general,” he says. In truth, Chinese investment is going to take a different form to the western investment that has left; the capital that has gone is in portfolio flows, which China, with a limited institutional investor base, won’t replace; China instead will provide direct investment into projects.

Nevertheless, it’s a useful reminder that the west does not hold a monopoly over investment, and that sanctions, though they will clearly hurt Russia, will not cripple it. RDIF is made up of over $10 billion in investment capital through various joint ventures and funds, the vast majority of it from the Middle East and Asia, not the west. “It’s not all bad,” Glodek says. “Russia is not as reliant on western Europe as some investing in public markets would expect.”

Be that as it may, expect Russia to court China more than ever. “Given the strained Russia-west relations,” says Kolychev, “this will be given even more priority by the government now.”

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mil ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohame ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocati ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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