If that is what it takes to preserve the Euro then most bankers and many multinational corporations are now in a mind-set to live with it.
All the leading investment banks predict more-or-less the same thing for Russia in 2012: a poor and volatile first quarter of the year with growth, investment and stock markets picking up and gathering momentum in the second half of year barring a train wreck in the rest of Europe.
Investment in Russia is stymied, capital flight is going to continue with at least $6bn a month probably leaving in the first quarter and up to 150,000 middle class Russians are packing their bags and waiting for visas to emigrate. The doubts and uncertainties will be clarified by the March presidential elections.
We have to wait and see if the webcams in every voting station and transparent Perspex ballot boxes materialise, as Prime Minister Vladimir Putin promised during his marathon televised Q and A last month.
If voting follows the anyone-but-Putin pattern set in the Duma elections, then the presidential vote will go to a second round. Complaints of ballot stuffing and vote rigging in the December Duma elections, while spurring Putins children to take to the streets were not significant enough to have made a difference to the results. The exit polls were a close-enough match to the final results to invalidate the reaction by Yavlinsky, Nemtsov and all calling for a re-run. The major manipulation of the vote came before, in the administrative resources applied in support of United Russia such as the teachers at a school in Samara who, according to BSR sources were told, f you want to keep your jobs, vote for United Russia.
Despite the pent-up demand by many owners of Russia companies to cash in, the lack of investor confidence across Europe means there is little prospect of any significant Russian IPOs on the London Stock Exchange until April or even later in the year. This means a gap of over a year since the last Russian money-raising IPO in London.
In terms of British-Russian relations generally we have to concur with Voice of Russia's year end analysis:
Despite the recent cooling in bilateral relations, trade and economic cooperation between Moscow and London saw good progress this year. Britain has regained its top position as a major investor in the Russian economy having injected a total of $40.8bln into Russia. The total volume of British investments in Russia was $21.6bln in March 2011. About 600 British companies are operating on the Russian market. Bilateral trade went up by nearly 50% to $10.3bln in the first six months of the year compared to the same period last year.
After a good start Russian IPOs were disrupted by the economic turmoil in the second half of 2011 as many investors preferred to sit and wait for better times.
In 2011 domestically companies earned an estimated $10 billion from IPOs, says Vedomosti. The losses from postponed deals stand at around $7.3 billion, Kommersant reported.
Ten Russian companies went public in 2011, with a half of placements taking place in London.
The City of London is engaged with the Russian Presidential Taskforce for the creation of an International Financial Centre in Moscow. Eight working committees are established and the joint commitytee will have their third meeting in April 2012 in Moscow when the Lord Mayor of the City of London visits Russia.
But we cannot wait for politics to get out of the way, the markets to settle and Europe to sort out its Euro problems. The case, in Londons Commercial Court, where self-exiled Boris Berezovsky is demanding £3.6 bn in damages from fellow oligarch Roman Abramovich, will draw to its conclusion; the inquest into the suspicious death of Alexander Litvinenko will open and the chief suspect sought by Britain as the alleged murderer, Andrei Lugovoi, will testify by video link from Moscow.
On January 16th Russia's Ambassador to the Court of St. James's, H.E. Alexander Yakovenko will host Alex Salmond, Scotlands First Minister and members of his government in the Embassy at a presentation of opportunities in Scotland targeted at Russian investors. Later in the year the ambassador expects to host similar presentations for Wales and Northern Ireland as he seeks to promote Russian Investment in the UK.
With the Queen's Diamond Jubilee and the Summer Olympics there is going to be a lot of activity in London, and Russians are welcomed with open arms by the Mayor of London, Boris Johnson who is standing for re-election in May.
John Bonar
