US piles on sanctions as foreign investors pour more money into Russia

RT
Thu, 14 Feb 2019 10:34 UTC

© Global Look Press / Konstantin Kokoshkin

Zaryadye Park in Moscow

Russian companies' stocks attracted the most foreign investment in 5 years, adding nearly $576 million in January, the Central Bank of Russia reported. Investors also actively poured money into Russian bonds despite US sanctions.

The ruble-based Moscow stock exchange (MOEX) index has reached a new all-time high, surging 6.4 percent since the beginning of the year, the regulator said in its report on liquidity of the banking sector and the financial markets issued on Tuesday.

The index hit several records in January, finishing the month at 2536.28 points, and later reached a new all-time high of 2551.97 points on February 6.

At the same time the dollar-dominated MSCI Russia Index rose 13.2 percent reaching the figures of April 2018, when harsh anti-Russian sanction were introduced by the US.

The Russian state bond market (OFZ) also attracted foreign investors. Non-residents expanded their investment into Russian bonds by $837 million, the highest figure since January 2018. Half of them were purchased at auctions, while the other half at secondary market, where the inflow of foreign investment has been recorded for the first time in a year, according to the central bank.

"In January the situation in the Russian financial market significantly improved due to the growth of global demand for risky assets," the regulator explained in the report. It added that softening of the US Federal Reserve's rhetoric on monetary policy, as well as the progress in US-China trade talks and the rise of oil prices back to $60 per barrel positively affected investors' sentiment.

Last week, Moody's upgraded Russia's credit rating from Ba1 to investment grade level of Baa3 with a stable outlook, acknowledging the "positive impact" of government policies. In October, Moody's senior vice president predicted the return of foreign investment to the Russian market due to the financial results shown by its companies.

Last year, Russia made a top 5 list of Europe's most attractive destinations for foreign investments, according to the data published by professional services firm EY.

Comment: RT reports on Russia and Germany's increasing trade ties:

Nothing stopping Russian-German trade turnover's rapid growth

Trade turnover between Russia and its second largest trade partner, Germany, increased 8.4 percent and reached nearly €62 billion ($70 billion) in 2018 compared to previous year, according to the German trade lobby.

Year-on-year imports from Russia to Germany expanded 14.7 percent, amounting to €36 billion ($40 billion). Export to Russia rose by 0.6 percent to €25.9 billion ($29 billion), the German-Russian Chamber of Commerce, which represents over 800 German firms, reported on Monday citing the Federal Statistical Office.

This is despite sanctions against Moscow and threats from the US to penalize German companies involved in the Russia-led Nord Stream 2 pipeline project.

"German business has successfully increased exports to Russia despite the market difficulties, sanctions and counter-sanctions. This has also improved our expectations for 2019," the chairman of the German-Russian Chamber of Commerce, Matthias Schepp, said in a statement.

At the end of last year, Schepp said German firms boosted their investment in the Russian economy in spite of economic sanctions, adding such an investment volume has rarely been seen since the collapse of the Soviet Union. Speaking to RT at the St. Petersburg Economic Forum in May, the head of the German trade lobby said that it's not only car manufacturers investing heavily in Russia but medium-sized businesses as well.

Germany is Russia's second largest trade partner, behind China. The trade turnover between Beijing and Moscow also surged last year by 24.5 percent to $108.3 billion, with $56.1 billion of it amounting to Russian exports to China. This is the first time since 2006 that Russia has had a trade surplus with its Eastern partner.

It's becoming clear to investors that the US sanctions regime is a flop and that Russia is a force to be reckoned with:

• Russia outmaneuvers unreliable US gas, and Brits buy up half of Russia's Eurobonds
• Putin, Xi & Abe: Greater Eurasia Coming Together in Russian Far East
• Russia and Singapore sign $1bn worth of investment projects at ASEAN Summit
• Germany needs to invest in Europe and have good relations with Russia, US President destroying the American world order says former German Foreign Minister

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