a)Foreign investors participating in the Russian market see that there are many difficulties and important differences in the structure and behavior of the Russian market. Though risky, investing in Russia gives many opportunities to earn profits and superprofits. Some investors managed to achieve remarkable returns by implementing strategies specifically tailored to the Russian market.
Foreign investments are coming to Russia as direct investments, i.e. financial participation in the creation of joint ventures and fully foreign-owned firms, and indirect or portfolio investments, i.e. purchase of stock, without sharing in the institution's management.
However, the influx of foreign capital is still insufficient. The process is hindered by high interest rates, inadequate tax and customs legislation.
Russian investment industry is developing rather rapidly. Russian investors are beginning to play a prominent role in Russia and abroad. Along with investing their own resources, they participate in investment auctions, help to allocate investment from international financial organizations.
Over the last three months, Russian mutual funds, known as payeviye investitsionniye fondy (PIFs), have collected $12 million. Though the money invested in mutual funds equals a mere 0.02%-0.05% of the Russian population's savings, this fact shows that people are prepared to invest. Russian mutual funds invest in government securities and equities. The main problem in investment activities in Russia is objective valuation of fund assets – Russia still lacks officially recognized valuation centers.
Russian investors have a tremendous potential for growth.
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