The merest mention of investing in Russia is certain to catch the attention of many investors around the world, to the front with many different opinions and very different experiences. The truth is that Russia is something of a mystery to many people around the world and the headlines regarding political friction between the East and the West, and unpleasant experiences for companies such as BP, do not help the situation. So what exactly should you expect when looking to invest in Russia?

The Russian economy is no doubt that the Russian economy as it stands is based upon the country’s massive natural resources which include oil, gas and precious metals. The country has a massive stake in the worldwide supply of gas, something we saw when a gas line was “switched off” due to a dispute with a neighbouring country, and this is likely to continue for some time to come. However, annual economic growth in Russia has been averaging around 8%, prior to the credit crunch and worldwide recession, which is certainly something which warrants further investigation.

There are a number of very prominent and very strong economic sectors in the Russian economy which include the aircraft industry, electronics, telecoms and agriculture to name but a few. The country also has very strong trading relations with China, the US and the majority of the leading worldwide economies which bodes well for the future. It will be interesting to see how these strong overseas partnerships develop because there is very much a public face and a private life for the Russian economy.

Ways to invest in Russia are a number of relatively easy ways to invest in Russia which include direct shares, collective investments as well as index tracking investment vehicles. Direct shares attract the highest risk/reward ratio while collective investments and index tracking investments will give a general return linked to some specific index or economic indicator. So depending upon your personal risk/reward ratio profile there are options to mix and match the above investment vehicles.

The future of the Russian economy: After many years in the “cold” there is no doubt that the Russian economy is now well and truly back in the international fold although work still needs to be done with regards to regulations and business practices. As time progresses and trading relationships with the US, China and other leading economies continue to strengthen there is no doubt that the Russian economy is well-positioned for the future. The massive array of natural resources available to the Russian authorities will forever be in the minds of overseas investors and overseas governments, keen to have access to these potential riches.

On the surface the risk/reward ratio with associated to investing in Russia would seem to be towards the higher end of the scale but in reality it may be very different. The public face of Russia is very different to the private face with the authorities keen to develop the economy and various business arenas.

In 2009 the Russian Economic Summit was a chance for many nations including the BRIC Nations; Brazil-Russia-India-China to give their
disapproval of the Global Economic Crisis, and they like most blamed the United States of America. The 2010 Russian Economic Summit was a totally different scene, rather than complaining or pointing fingers, it was all about the future, growth, and strength of the economic recovery.

When watching the world news, especially the international business news, one needs to understand there is a lot to know, more than any one person could, or most likely would. It is for this reason I like to discuss such world events with the experts. Imagine my good fortune to meet a scholar of US-Russian post cold war relations? Indeed, Jesse Giraldo was on hand to answer a few of my questions recently. First, I asked; Have you been following the recent Russian economic summit?Jesse replied; Loosely. I’ve read a few reports on the discussions being held between the E.U and Russia. Greece’s fiscal instability, and the

Euros weakening performance seem to be the major issues under review. However so far that’s all that seems to be going on, quite a bit of discussion on what wrong, I haven’t heard anything of actual substance come about other then abstract statements such as their firm resolve to “move forward in their partnership”. The media by and large though seem to feel that this summit has a more harmonic atmosphere to it. I suppose that’s a plus.

Well, all good points, and it certainly beats the previous attacks at the last economic summit where the US was the punching bag for the global economic melt-down. Russian Television seems to be keeping things positive I’ve noted, along with BBC, and CNN International. Too the papers in Taiwan, India, and throughout Europe seem to be playing positive news. So, I concur. It seems folks are so focused on the World Cup Soccer Tournament and the US Open that many are not following the Russian Economic Summit.

China had announced it “will” allow the Yuan to float in coming weeks, right as their banking stocks took a hit, and the Agricultural Bank of China is going for an IPO worth some $33 Billion. Still, the BRIC nations – Brazil, Russia, India, and China are discussing a new reserve currency to settle accounts with, something that was the main theme at last year’s summit. Luckily, this time it is just muddled chit-chat, while the big talk in Russia was about innovation and attracting investment capital into Russia to take advantage of the uptick in commerce.