An increasingly wide group of institutional investors, high-net-worth individuals and retail investors are providing the new capital to make Russia the world's best performing equity market so far this year. The MT-50 share index is up nearly 200% in dollar terms, while the RTS index of 22 leading stocks has risen 166%. Demand continues to be funnelled through American Depository Receipts (ADRS), which have kept the blue chips active. However, newly-formed Russian equity funds are exploring lesser-known shares, and there is an expanding universe of attractive and undervalued companies.
Investors entering the market for the first time include global emerging market equity funds, US and European insurance companies, Swiss banking institutions, university endowments, and a wide assortment of US and European-based mutual funds.
Most of the hedge funds, the mainstay of the Russian stock market since the advent of privatization, have also been big Russia buyers. They range from the small Caxton Corporation and Moore Capital to the well-known Tiger Management, New Century Holdings and George Soros's colossal Quantum Fund.
Soros, who once referred disparagingly to Russian "robber capitalism", revealed in July that the Quantum Fund had made a $980 million investment in Svyazinvest, the telecom holding company that has controlling interests in 85 of Russia's regional telecom companies.