By Lee Hyo-sik
Staff Reporter
A growing number of retail investors are turning their eyes to Russia for equity investments as an alterative to the increasingly volatile and risky Chinese markets. Investors have put money into funds investing in Chinese stocks since the beginning of the year for higher returns on bullish market runs, but now many are concerned about overheating and are trying to diversify their investment portfolios.
But they are reluctant to take chances with funds investing in listed companies in the U.S. and other advanced economies amid an uncertain economic outlook. Under such circumstances, funds investing in shares listed on the Russian market have begun attracting investor attention as its energy-rich economy is booming on recent rises in prices of crude oil and other raw materials.
According to Zeroin, a fund evaluation company, an equity fund investing in companies listed on the Russian and other Eastern European markets, managed by Shinhan BNP Paribas Asset Management, recorded a 6.9 percent gain in the past month, outperforming other overseas equity funds of which average returns reached 3.6 percent.
The fund has attracted some 100 billion won in the past month on expectations that the Russian market will remain bullish for the foreseeable future as companies there continue to benefit from high prices of crude oil and natural gas. Other funds investing in Russian stocks have also posted over 6 percent returns.
``Local investors need to pay attention to Russia funds as its economy has and will continue to maintain an upward momentum on rising prices of oil and other raw materials. Russia produces 12.1 percent of global oil output and 21.6 percent of natural gas supply,'' said Hana Daetoo Securities analyst Son Myung-chul.
He also said shares listed on the Russian market are undervalued, compared with those listed on Chinese and Indian markets. `` The Russian stock market has more room to go up as its main index increased only 14.2 percent in the first 10 months of the year. With concerns over political uncertainties easing, Russia funds at the moment seem to outrival other funds investing in Chinese and other emerging markets.''