I have spent the past two years focusing on Russia. I live, travel and work in between London and Moscow giving me a strong understanding of where Russia is today. Russia is a greatly misunderstood country by journalists and investors worldwide. Mafia and bears do not walk the streets like they once did (well only the mafia once did) but neither is it true to say that Russia is a safe and golden land. The unavoidable truth is that Russia is still far behind the rest of the developed and emerging world politically, economically and commercially. The legal system is corrupt, highly inconsistent and far from independence. As a consequence minority shareholders if abused do not have any defence. That being said, do not think that Russia has remained stagnant since its inception 30 years ago. Growth is the highest in the G8, while debt both public and private is lowest. Russia also continues to hold a large portion of high quality commodity assets ranging from diamonds to natural gas. Russia is a great opportunity but should be treated with as much caution as excitement.
Growth and Opportunities: The Russian Consumer Story
To start with the positive side of things. The consumer sector is where Russian growth has been and will continue to be. The country's population has been fairly stable at around 140 million, while national income has surged. As a result it has created a middle class; GDP per Capita (PPP) is around $17,000 in Russia against $12,000 in Brazil, $8,000 in China and $3,000 in India. A middle class that is growing in number every year as real wages grow around 4% per annum. So, what do middle class families do? They take out debt buying cars and houses. This can be seen by Russia's 40% loan growth in 2012 - albeit from a very low base. The biggest winners are the consumer retailers such as Magnit (MGJCL.OB), and London-listed
