Russia's proposal to use its £32bn national wealth fund to boost the country's financial markets is an ‘overdue' and ‘wise' use of money, according to Hexam Capital Partners.
Marina Akopian, EMEA Absolute Return fund manager and partner at Hexam, believes Russia should have made this move a few years ago instead of using the $170bn Russian Stabilisation fund to buy US securities such as Fannie Mae and Freddie Mac.
She says: “The Russian government thought they were buying risk-free assets at the time and then the sub-prime situation happened.”
The Kremlin has only just grasped what emerging market investors have realised for ten years that there markets now offer a better risk-return profile, she says.
Akopian says the proposal to inject cash into Russia’s domestic market is “a wise use of money”.
“Russian companies are cheap in terms of valuation and risk; they’re the bargain of the century. I applaud the government for their wise move to support the domestic market and buying good assets at a good price with little risk.”
She believes even if the Russian Government spends just $10bn as an injection into the domestic market, it will have a ‘very significant impact’.
The commodities heavy Russian market was brought to its knees in August to a very low volume as the stronger dollar drove commodity prices down.
However, Akopian believes the injection, if it goes ahead, will lift share prices and improve sentiment in Russia.
“If the government buys into domestic stocks, it will be a huge vote of confidence,” she adds.IFAonline
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