International research


“Russia is always cheap” is common notion among investors. At first glance it appears to be true. Over the last decade the average price/earnings (P/E) ratio discount for the MSCI Russia index to the MSCI Emerging Markets index was 50%. Russian equities were never close to broader emerging market (EM) equities on a P/E ratio basis.


The US has added several Russian entities and individuals to its sanctions list, causing a market sell-off. Among blacklisted companies are three public ones: Rusal, the alumina producer, En+, the holding company, and carmaker GAS, which are indeed controlled by Oleg Deripaska. US Treasury imposed ban on ownership of any equity and debt instruments issued by these three companies. Thus, investors might have feared the alike measures to be taken against other public Russian companies.


The presidential election will be held in Russia on 18 March and, in our view, it is almost certain that Vladimir Putin will win in the first round.

At the start of 2018, Russia equities have performed relatively strongly and started to catch up with other emerging market (EM) equities after underperforming them by a considerable margin last year. We think there is still long way to go in hard currency terms, especially for well-constructed fund portfolios like Parvest Equity Russia and Parvest Equity Russia Opportunities.

In August and September, the Central Bank of Russia (CBR) stepped in to rescue two of the country’s largest private banks – Otkritie FC and B&N Bank. This raised concerns about sector-wide stability.
On Wednesday 2 August, Donald Trump signed into law new sanctions against Russia.

We continue to consider Russia equities to be one of the best value stories in the world with the highest dividend yield among global equity markets.