Investing In Russia: 10 Tips
If you want to make the most of your money in these turbulent times, you cannot go wrong with investing in Russia: ten tips. Russia is a resource-rich country brimming with economic opportunities and market potential. As long as you are smart with your money and do a little research, investing in Russia can prove to be very lucrative indeed. So here are ten tips to make investing in Russia as profitable as it can be.
- Do your research. As with any investment decision, you cannot just jump into investing in Russia completely blind. You'll want to watch the trends in the stock markets and policy changes to see what markets are going to be the most profitable for your investment. Obviously, this is the most time-consuming part of the process, but also the most important. Be patient, follow the foreign newspapers, (definitely use "Pravda," "The Guardian," or "The Economist" in this regard) and get a sense of when certain industries are going to be more profitable than others.
- Find out if your stockbroker is licensed to take action in the RTS (Russian Trade System). You will need to find a stockbroker with either a Federal Financial Markets Service of Russia dealer license or Federal Financial Markets Service of Russia broker license. This step is absolutely compulsory. Otherwise, without having access to someone with these qualifications, investing in Russia is illegal.
- Be mindful of economic swings. Since Russia is a rapidly developing country, there will be periods of great growth followed by slower, less gainful times. be mindful of the trends and make sure you're not putting you're money in at the wrong time.
- When in doubt, invest in oil and gas. Natural resources are almost always guaranteed to have positive returns when investing, and Russia is the largest exporter of natural gas in the world. It also has the largest oil reserves in the world, so beginners to the RTS should definitely put their dollars in these industries. Great places to start include, but are not limited to, Lukoil and Novatek.
- Furthermore, mining is always a lucrative industry. Considering that you're dealing with the largest land mass on the planet, you should definitely look into mining and steel production when investing in Russia. In this respect, you cannot go wrong with Mechel Open Joint Stock Company.
- You cannot go wrong with consumer goods. Russia, along with Brazil, India and China, are a part of what's known as the BRIC countries. These four nations have growing middle classes with an increasing spending potential and, thus, a higher demand for consumer goods. Taking this into account, look into investing in industries such as clothing, televisions and other electronics.
- Be wary of the biggest players. Despite the mentality of "they're on top for a reason," remember that you shouldn't invest in a company in Russia just because it may be the largest one. Case in point, it would be advisable to avoid Gazprom, Norilsk Nickle and Rosneft. While these companies are indeed the largest in their respective industries, they are closely associated with the outrageous fees BP had to pay for the environmental damages it had caused to parts of the Russian countryside after storing nuclear waste there for nearly a decade. As such, these companies have seen increasingly diminishing returns-once again, this is where doing your research pays off in a big way.
- Remember the bare essentials, food and beverages. Everyone needs to eat and drink, so investing in these industries is both a good way to start and ensure steady returns. Wimm-Bill Dann Foods is a great company to start with.
- Telecommunication brings the world together. Just like in the West, long-distance telecommunication is a burgeoning industry. Be sure to look into such companies as Mobile Telesystems OJSC, Rostelecom OAO and Vimpel-Communications.
- Everyone watches television. Russia is no exception to this rule. CTC Media Inc. is a safe investment that's guaranteed to have reasonably positive returns.
Now you have ten tips to invest in Russia. Remember to be mindful of the trends and be careful with how much money you use. With these ten tips and a helpful broker, investing in Russia will be nothing but profitable for you.