Public offerings in the West have been decimated by the crisis as money is scarce and investors remain nervous of the possibilities of a second round to the crisis.
But the so-called “global” crisis is a misnomer in that the only countries facing a real crisis are almost exclusively in the developed countries of the northern hemisphere; the rest of the world experienced a nasty external shock, but even Russia, which suffered worst than its peers, is now bouncing back, while the growth in China and India barely missed a stride.
So far this year the world’s largest IPOs have come from Asian and developing countries. The top 10 offerings of the year include firms from China, Russia, Poland and India, none from the US and only one from western Europe, in Spain.
AgBank was the biggest to date but Russia’s aluminium giant United Company RusAl also pulled off a record-breaking $3.2bn IPO in February. Capital is moving eastwards rather than float in London or New York. RusAl chose to list its shares on the Hong Kong exchange.
The IPOs are only the tip of the iceberg. Analysts in Eastern capitals predict that capital will start flowing down from the large Western markets to the East in the second half of this year.
Emerging market funds easily outperformed the developed world in the last decade with most putting in triple-digit returns, while the established markets lost an average of 20pc, according to fund managers in Moscow. Despite the strong growth and far superior macroeconomic fundamentals, stocks in emerging markets suffer disproportionately from the instability that has wracked most bourses over the last six months; when sentiment turns sour, portfolio investors tend to sell their emerging market shares first.
The MSCI Bric index has lost 9pc this year, weighed down by the 26pc decline in Chinese stocks on fears of overheating and tighter monetary conditions.
However, the funds investing into these countries have significantly outperformed the indices with Russian funds returning the most. Russia-focused funds broke a four-week streak of inflows in July but still finished at the top of their peer group for the first half of 2010, data from Emerging Portfolio Fund Research shows. Over the first six months Russia has drawn in the most money among the Bric countries, attracting $2bn in new money against China’s $1.2bn.
“On average, Russian equities are more lowly rated relative to their emerging market peers,” Uralsib brokerage said in a research report. “The low valuation does not, in many instances, reflect the recovery now taking place, and the risk premium is excessive.”
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