World investors do not see Moscow as financial center

08:30, September 10, 2010      

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Foreign investors do not recognize Russia's capital as a world financial center -- the project the Kremlin has been steadily promoting in recent years, according to Moscow's RBC daily newspaper.

The paper reported Thursday that a conference here, "Moscow a global financial center, ruble a reserve currency", was a disappointment for its organizers. Despite the International Monetary Fund's sponsorship, professional investors were reluctant to follow the lead, comparing Russia to Latin America in terms of financial and political stability, it said.

Experts from the European Union attending the conference estimated the volume of Russia's financial market as one tenth of that in the U.S. and one fifth of that in China.

They said, the Russian financial market was roughly equal to that of South Africa or South Korea and was miles behind the financial potential of China's HongKong.

Hans Jorg Rudolff, General Director of the Barclays Capital, bluntly stated that Moscow had been unable to attract capital and investors so far.

"Don't even try to emulate London and New York," he said, causing howls of laughter in the audience gathered in a downtown hotel.

He said internal instability had resulted in not one single Latin American country becoming a world financial center.

Head of the IMF's Moscow bureau Odd Per Brekk said that, in order to become another world financial center, the capital should wait until the national currency had become convertible, inflation was low and the government's macroeconomic policy was healthy.

HSBS bank chief economist Alexander Morozov said: "Currently, all this has been rather a campaign aimed at boosting the image of Russia and Moscow. This, by itself, will hardly bring any fruits." He pointed to the underdeveloped communications infrastructure and uncomfortable business environment in the country.

His thoughts were echoed by Deutsche Bank chief economist Yaroslav Lisovolik, who said: "In the next five years, Russia will have to defend its right to host a financial center even on the regional level."



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