As in the past, we participated in the 13th Annual VTB Capital Investment Forum "RUSSIA CALLING!". This year again for the second time the discussions were done at a distance, COVID obliges. Despite the attraction of the Russian capital as always in November Moscow was grey and cold.
The macro view of Russia is a mixed bag. The investment view is a bag full of holes .
As I participated in the past, I have to note that Russia still lack inflow of capital in the private companies and need a real development in infrastructure.
There is a very low participation of private Russian capital in the economy. Russia is trapped in an intermediate of development. This is not a cyclical slowdown in Russia. This is a structural one, with a clear mis allocation of resources.
Although it is true that the and the political and economical sanctions are a heavy weight.
VTB Capital Investment Forum "RUSSIA CALLING!" is held since 2009. Every year the event attracts an authoritative audience, including representatives of government agencies, heads of Russian and international companies, and investors. The agenda of the forum covered the most pressing issues of the global economy, finance and business sectors. The forum's influence and informative value for the business community has been repeatedly recognized.
This year Forum was attended online by business representatives, politicians, managers and interested viewers from 106 countries. Discussions on key economic trends unfolded during the five sessions, broadcast live on leading Russian and international platforms.
Mr. Yuri Soloviev, First Deputy President and Chairman of VTB Bank summarised the issues and challenges :
"The business world is undergoing fundamental changes - they began long before the pandemic, but Covid has exacerbated and accelerated the development of trends that we are working with today. We see how the infrastructure of entire countries and regions is being rebuilt, how technological and financial ecosystems are changing traditional business models, how the retail investor affects the movement of the market, and the climate agenda determines the long-term prospects for the development of the world's economies. The objective of this year’s forum is to discuss what risks and opportunities this reality opens up for us. There is no doubt that we are in for a race in efficiency - technological, digital, social, communication, legal - across all industries. Can we become winners and what resources do we have, where to find drivers for business transformation and how to adapt to changes - we need to find answers to these important questions.”
The first day of the forum was devoted to the discussing macroeconomics, the transformation of markets and business in post-pandemic conditions, the impact of new strains of coronavirus on the global economy and the transition to work focused on sustainable development priorities.
During the Plenary session, President of the Russian Federation Vladimir Putin held a traditional conversation with foreign businessmen and investors. In almost two hours, the head of state answered questions about the development of the Russian capital market, the decisions that the Russian authorities make to maintain the financial stability of the country's economy, and the potential for investment in ESG projects in Russia.
President Putin assured the participants that the Russian government would try to do everything, so that the work of investors on the Russian market would be more effective than in other regions of the world. He emphasized that the work in the real sector of economy was continuing, and expressed hope that the amount of such cooperative effort would only rise. International relations were also addressed: for example, the participants wanted to know Putin’s position on the effect of the US elections on the economy, the resolution of the Nagorno-Karabakh conflict, and the situation in Belarus.
Russian President Vladimir Putin:
- Global economy recovery rates questionable due to a new COVID strain.
- Instructed the Government to update itsplan to combat coronavirus considering emergence of the new Omicron strain.
- Noted high inflation pressure, leading the world into a new pandemic wave.
- Global price growth caused by a number of reasons, supply chains are disrupted.
- Budget deficit growth and global inflationary risks to stay across the world .
- Food price growth risks increasing globally, felt in Russia as well .
- We need not only to manage inflation outcomes but focus on prevention measures .
- Did not rule out new support measures for residents, based on available resources .
- All social support measures in the RF are within the budget .
- The Bank of Russia’s monetary policy maintains inflation suppression .
- Russia GDP growth over 9 months amounted to 4,6%, 4,2% growth expected by year’s end.
- Labor market in the Russian Federation has fully recovered. The unemployment level in the RF is down to 4,3%.
- Increasing the share of infrastructure investments in the GDP is a long-term priority .
- Up to 2024 inclusively RUB 2,5 trillion will be allocated on a repayable basis for major infrastructure projects.
- Demanded to provide unconditional security of private personal data during digitalization .
- Higher availability of loans to growing promising enterprises going further .
- Russian stock indices climbed the pre-pandemic level .
- Instructed the Government to prepare tax deduction measures for long-term retail stock market investments .
Stock market trends and ESG
The second day of the forum was opened by the session of VTB Capital Investments "Drop in the sea or a tidal wave: what effect do individual investors have on stock markets?" The central theme was the role of private investors in the development of the Russian and foreign capital markets. Speakers and representatives of investment funds, assessed the future of market ESG instruments and global democratization of the stock market, and also identified areas in which investment can bring stable profitability in the coming years.
Participants noted that Russia passed the “Digital Financial Assets” law. But market players still have many questions about the regulatory basis, taxation for digital asset transactions. The lack of a civilized digital asset market in Russia hurts the budget and responsible market players, —There’s no denying the existence of the digital world.
“We spend a lot of time on our
mobile phones: seven hours a day on the average across the world. This is why
development of a digital asset market is of utmost importance” noted Vladimir
Potapov, CEO of VTB Capital Investments, Senior Vice-President of VTB.
Session on sustainable development "ESG - Right Here! Right Now?” dealt with the role of man in the new ESG realities and the impact of the sustainable development agenda on Russia. The issue of global warming is becoming increasingly urgent. The need to reduce CO2 emissions, to reduce consumption and to switch to alternative energy sources is being talked about all over the world.
However, the measures that are being taken in an accelerated mode are sure to have an impact on society. That while solving environmental problems it is necessary to remember social problems by reducing poverty and increasing education.
The Russian economy is preparing for record investments of up to 89 trillion rubles ($1.2 tn) over the next 40 years, to reduce net greenhouse gas emissions by 60%, when compared to net emissions in 2019. VTB Capital analysed the cost of reduction, capital expenditures and the consequential pressure on prices in individual sectors, as well as how emissions can be reduced in the least costly way and, accordingly, where the bulk of these investments can be directed.
According to the Central Bank , Russia’s plan to reduce its carbon footprint by 2050 will require investments of between 1 trillion roubles and 4 trillion roubles a year ($13.4 billion to $53.6 billion). Russia, the world's fourth-largest emitter of greenhouse gases, will utilise from 1% to 2% of its gross domestic product to cut net emissions of greenhouse gases by 2050 in the main scenario approved by the government.
Russian companies with businesses that negatively impact the environment have already started implementing principles of sustainable development, but their integration in the global climate agenda remains low, the central bank said.