RDIF: pension money good source of Russian stock market liquidity

Emerging Markets, 24.09.2012

The chief executive of the Russian Direct Investment Fund (RDIF), Kirill Dmitriev, has suggested issuing infrastructure bonds, setting up index funds and investing much of the pension system’s money as key ways of boosting the liquidity of Russia’s stock market.

 

Infrastructure bonds “could be used to finance development of the Far East and existing companies [and] are an attractive and accessible instrument for investors”, a statement by RDIF, a government-instituted fund for the promotion of private equity investment, quoted Dmitriev as saying at a meeting hosted by Prime Minister Dmitry Medvedev.

 

Index funds “would provide opportunities to invest not just in individual companies but the entire Russian market,” Dmitriev said.

 

“Thirdly, we need to look at the opportunity to invest a large part of the pension system in Russian companies whose shares are traded on the united Moscow Exchange [Micex-RTS].”

 

The meeting, where Medvedev spoke to key Russian business figures, was held during the Sochi International Investment Forum, an annual event last week where a French banker who is a member of the RDIF supervisory board made a case for Russia as a destination for foreign investment.

 

“Today, Russia distinguishes itself from many western countries with its low levels of external debt and unemployment and its considerable foreign exchange reserves, the world’s third largest,” the RDIF statement quoted Laurent Vigier, director of European and international affairs at French investment firm Caisse des Depots, as saying.

 

“This allows investors to expect a sufficiently stable macroeconomic situation, regardless of international financial volatility. I know the Russian government is taking a number of concrete measures to increase the competitiveness of the Russian economy, including the creation of special instruments to improve Russia’s investment attractiveness, one of which is the RDI.F”

 

RDIF, which has a capitalisation target of $10bn, was set up in June 2011 to co-invest with private equity funds, sovereign funds and various companies. It is mandated to provide its fellow investors with security that as a minimum matches its own commitment.