ONE trillion dollars. That may be the cost to Russian investors of Vladimir Putin’s rule. It is the equivalent of about $7,000 for every Russian citizen.The calculation stems from the fact that investors regard Russian assets with suspicion. As a result, Russian stocks trade on a huge discount to much of the rest of the world, with an average price-earnings ratio (p/e) of just 5.2. At present, the Russian market has a total value of $735 billion. If it traded on the same p/e as the average emerging market (12.5), it would be worth around $1.77 trillion.Not all of this discount is down to the actions of the Russian government. But it is probably responsible for the bulk of it. Investors have been nervous about corporate governance in Russia, thanks to a series of high-profile incidents such as the jailing of Mikhail Khodorkovsky, an oil magnate who fell out with Mr Putin, the expulsion of William Browder, a hedge-fund manager who campaigned against corruption, and the trouble faced by oil companies such as BP and Shell in dealing with local partners. All those events occurred well before Russia’s annexation of Crimea and its backing of separatists...
from The Economist: Finance and economics http://ift.tt/WK2XHO
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