Record foreign investment outflow from Russia

Foreign investors have been withdrawing from Russian companies. The trend has been observed for the last four months, reaching a record for the last three years at USD 1.6 billion in June – the Russian newspaper “Kommersant” reports.

Among other reasons, experts cited the following three major factors for the record-high capital outflow:

• Russia and the US’s failed reconciliation;
• Plummeting oil prices;
• Conflict between Rosneft and AFK Systema, two major Russian companies.

Strained US-Russian relations pose risks for any company working in the Russian market, with American economic sanctions likely to be continued and strengthened.

Oil prices keep on plummeting despite the OPEC agreement to curb production, with oil and gas being the two major sources of income for the Russian budget.

The conflict between Rosneft and AFK Systema demonstrates the weakness of the Russian judiciary, highly influenced by political factors.

With the Russian market becoming less attractive for foreigners, other emerging markets are growing. The last four months saw India grow by USD 2.6 billion and Brasil by USD 1 billion.