Capital outflow and Russia’s risk profile

With Russia experiencing a capital outflow, despite improving economic fundamentals, on the back of its risk profile Business RT spoke with Oliver Niedermaier, CEO of King Worldwide about the causes.

­RT:  You commenced in Russia about a year ago, why did you choose this time?
ON:“Actually we think it is the perfect timing, because we mainly advise global corporate clients to communicate basically, around their investments or their anticipated investments into Russia.  We also work a lot for leading Russian companies to attract foreign investment and present themselves ion the international capital markets.  So in hindsight we’ve done very well, it was one of the most successful organic office starts, and we are actually very bullish for the Russian capital market going forward.”

RT:  Why is that?
ON: “Well we are very much engaging into BRICS wide emerging markets strategies anywhere for our clients.  A lot of our corporate clients, which is about 900 corporations worldwide, large public companies, multinationals, are focussing on BRICS strategies and Russia obviously is an integral part of that.”

RT:  Would you say there is a perception gap between the reality of business sin Russian and what the international players think about it?
ON:  “I think that there still is, but it is definitely getting smaller and smaller by the day.  Obviously there are still challenges around transparency, disclosure, corporate governance.  But I think the Russian government, I think Russian corporations, are addressing those, and I do think institutional investors across the globe are recognising those efforts.”

RT:  Lets go into a bit more detail about those challenges – transparency you say is a challenge.  Why exactly, what exactly do you want to see happening?
ON:  “Well I think what the institutional investor community wants to see is some kind of global convergence of certain standards are disclosure transparency, around corporate governance.  At the same time I think the corporate world, when you look at the investor relations profession, when you look at how corporates communicate to their stakeholders, they also try to converge to some kind of global standard of principles.  And the more you see this conversion, and the closer the Russian standard operating model gets to that, I think in the better shape the Russian capital market will be.”

RT:  What are your prospects, go into that again, about how Russia will be seen in the future?  Do you think that is going to change, that perception? Is capital outflow maybe going to stop and capital inflow instead?
ON: “Well, it is hard to judge, especially in a post crisis world.  When you look at capital inflows and outflows, because obviously when you look, there are so many, China, Brazil, whatsoever, what happened over the past couple of years.  I don’t think it is really fair to look at that recent history and try to project that in the future.  I do believe, if and when, Russia continues down the path it is right now heading, that it is going to be a great investment environment, for both institutional investors and strategic investors, ie corporations, to do more business in Russia.”