Matthias Siller, a fund manager at Baring Asset Management, believes Russia’s huge commodities reserves mean it is best placed to supply the raw materials China needs in its bid to become the global economic power.
China’s industrialisation and urbanisation will require a colossal supply of raw materials, and while Russia’s energy reserves are well known, Siller highlights that the country also has huge reserves in other commodities.
He said: “Oil and gas aside, it is little known that Russia has approximately 40% of the global reserves of palladium, 28% of titanium, 17% of nickel and 8% of iron ore .”
As well as hard commodities, according to Barings, Russia is one of the world’s major suppliers of soft commodities, such as wheat and grain. This is a further source of investment potential as the global population expands and demand outstrips supply.
Siller’s Baring Emerging Europe investment trust was launched in 2002 with the aim of achieving long-term capital growth, principally through investment in Emerging European securities.
Just over half of the trust, or 56.4%, is currently invested in Russian securities in a clear indication of their confidence in the region.
It has returned 16.9% since inception while the MSCI Emerging Europe 10/40 Index has returned 6.5% over the same period.
The trust’s top holdings on May 12 were energy majors Lukoil, Gazprom and Rosneft. Telecoms provider MTS was the fourth biggest punt and Czech power company its fifth.
