Enes
Moscow
WINNER OF THE RF MINSTROY MEDIA COMPETITION 2016
Go to mobile

LATEST NEWS

14:46 23-06-2017
Lukoil won a tender on supply of 2,700 tons of oil to Severstal enterprises
14:17 23-06-2017
President Putin to control pipeline mating at the Turkish Stream construction
13:37 23-06-2017
Reconstruction of Moscow conservatoire to be completed
13:26 23-06-2017
Thrill rides to be built in Moscow Luzhniki
12:54 23-06-2017
Unique green roofing to be built in Moscow during renovation
12:32 23-06-2017
The Chinese participating in Moscow Metro construction
11:16 23-06-2017
Grand fraud discovered at a business centre construction site in Krasnoyarsk
18:02 22-06-2017
Rostec to restore enterprise producing acoustic equipment
17:50 22-06-2017
Seven plants to open in Dubna special economic zone
17:35 22-06-2017
Putin heads for Anapa to control Turkish Stream pipeline link-up
17:12 22-06-2017
Heineken sells its brew-house in Belarus
16:53 22-06-2017
Tesla signs preliminary agreement on plant building in China
16:35 22-06-2017
Industrial warehouse in northern Moscow put on auction for $751,000
16:02 22-06-2017
China suggests project for Changchun – Vladivostok high-speed railway
15:33 22-06-2017
Europe’s gas demand exceeds Nord Stream 2 capacity, Wintershall says
14:56 22-06-2017
Poland to demolish 500 monuments to Soviet soldiers
14:33 22-06-2017
President Putin orders to close notorious landfill in Balashikha
12:22 22-06-2017
Gazprom estimates Turkish Stream project at $6 billion
11:56 22-06-2017
Japanese NEDO to implement renewable energy project in Yakutia
11:45 22-06-2017
Russian Railway gets $157 million for development of Moscow railroad
11:14 22-06-2017
Huge Lenta hypermarket to be erected in Naberezhnye Chelny
10:58 22-06-2017
Australian sheep farm to be built in Russia for $334 million
09:45 22-06-2017
European operators start extension of gas pipelines for Nord Stream 2
17:57 21-06-2017
Israel's largest Gottesman oceanarium to open in July
17:42 21-06-2017
Egypt’s court suspends transfer of islands to Saudi Arabia
17:21 21-06-2017
Russia to supply three Be-200 amphibious aircrafts to Argentina
16:54 21-06-2017
Rolls-Royce to supply engines for Russian-Chinese wide-body aircraft
16:38 21-06-2017
Wintershall likely to collaborate with Gazprom in Iran
16:20 21-06-2017
Metro retailer to invest €100 million in Moscow region
16:09 21-06-2017
Step Agriculture Holding starts mass construction of dairy farms
All news

ARCHIVE NEWS

«    June 2017    »
MonTueWedThuFriSatSun
 1234
567891011
12131415161718
19202122232425
2627282930 

The investment process: where to put the money?

logo russianconstruction.com
The investment process: where to put the money?

For investments to be made in the country, it is not enough to develop financial technologies. It is necessary that Russian citizens be confident in their future.

In the next 10—20 years, direct investments by the population in the economy may be half as much as from the banking system. Now, US citizens, investing their money in development and construction companies, are raising investment profitability to 12—14%. The testing of similar projects is taking place in Russia. Progress was discussed at a sitting of the Integration International investors’ club which took place at the President Hotel in Moscow. It was dedicated to the search for new investment schemes.

 

From deposits to an equity market?

The Russian construction sphere needs investment badly. But it is impossible to satiate the market without increasing the inflow of capital funds into the economy on the whole.

Russia today is a bright example of the economics of state capitalism. The main investments in the real estate sector flow from either the budget or state corporations and foundations. It is logical that the state’s share in the economy has reached 70%.

Besides, the efficiency of state investments is far from perfect, and with the growth of the state financial deficit, the source is becoming shallow. But still, according to the assessment of Alexander Kogan, President of the Integration Club, and minister of the environment and natural resources of the Moscow region, neither foreign nor private money can compensate for the losses.

Meanwhile, there is money in the country. According to expert evaluation, the population has up to $500 bln either stashed away or as banking deposits. Not so long ago the bigger part of this money was spent on realty, but at present this type of investment is unprofitable.  

As Alexei Prokhorov, the President’s Councilor at the General Invest holding, thinks, private investors should study all possible investment variants for the money to reach the real sectors of the economy, including construction.  They have already become familiar with the deposit stage, and now it is time to assimilate the equity market.  

According to the expert, it is more profitable to invest money in federal loan bonds. At present, these are pretty much the most reliable security papers, more profitable than investments in real estate, and on their way to being a good alternative to deposits.

It is necessary to look for new forms of investments; for example, direct investments. According to Alexei Prokhorov, in a few years, the necessity of banking services will lessen, and private investors will deal face-to face with large companies.

A number of experts also think that private investors do not have much chance of success, as in several years their blocks of shares will be concentrated in the hand of large players, which in turn enhances the risks of direct investment.

The investment process: where to put the money? 

Where to invest

The success of the investment process also greatly depends on another factor – power. According to Alexander Kogan, the Russian government is coming over to the concept of management. It is focused on the process, not the result: specific performances are determined at each stage of the project’s implementation, for example, how much labour efficiency has increased, how polluting emissions have decreased, etc.

Investors’ ability to use the authorities’ intentions, to study and to analyze information, is very important in the investment process.

When the Central Ring Road was being designed, many people bought land plots along its route. A lot of money was invested in nearby construction industry enterprises (sand and gravel pits) and infrastructure projects.  

A good opportunity to cover the outlay for hotels and other service objects in a short period of time is afforded by the 2018 Football World Championship. Another variant of money investment is to take part in the program of waste utilization, on which the government is planning to spend 150 bln roubles (about $2.3m). It is a very profitable investment – the waste may be recycled for valuable materials.

And some people understood this long ago. As Alexander Kogan put it, it is one of the most criminalized spheres: of the total 11m tons of waste annually carried to the Moscow region’s solid waste landfills, only 2.3 m tons are “shown” officially, i.e. about 20%. The rest is managed by shady schemes.

We may only guess as to who receives the vast sums of money in play, so strong resistance to the authorities’ plans to make the sphere legal and available for private and honest investments may be expected.

The investment process: where to put the money? 

Would people like to invest?

Meanwhile, Russian markets are decreasing. The number of insurance companies has decreased almost twofold, leasing companies by 50%, and banking operations by 40%. The number of real estate agencies has decreased greatly, especially in Moscow.  

Many construction companies have gone bankrupt or are close to it. At the same time, 80% of the population are not satisfied with their living conditions.

It is the logical result of weakened investment activity in Russia and the domination of the state capitalism model over the economy.

— Now we have to study the domestic economy to find working financial mechanisms, Mikhail Belyaev, Chief Specialist of the Institute of Stock Market and Management, thinks.  

But it is becoming clearer and clearer that investment hunger cannot be explained only by the lack of financial tools and market reduction. One of the reasons is the atmosphere in society itself. According to polls, 20m Russians sometimes think of emigrating. These people will not invest in the Russian economy.

When the young see poor old people, they give up. And they will not gain confidence in the future unless pension reforms based on investments takes place.  Instead, the state again freezes retirement savings, annihilates the investment aspect of the state pension... And it decreases the young’s desire to live in Russia.

The more people are dissatisfied with their lives, the less they will invest in the economy. And this correlation will grow, first arithmetically and then geometrically.

That’s what the Russian authorities should think about.

Vladimir GURVICH

Photo by the “Integration” IC press office

Related publications

PARTNERS

UP