By Andrei Skvarsky.
Sberbank has released an extensive body of research arguing that Russia’s economic growth is driven by consumer-related sectors and not by oil and gas, and that those sectors offer vast opportunities to investors.
While extractive industries account for two-thirds of Russia’s stock market, and oil and gas dominate the country’s exports, domestic consumption has delivered 80% of the country’s economic growth since 2004, according to research papers launched by Sberbank CIB, the investment banking arm of Russia’s biggest lender, on February 5.
The papers were presented at a news briefing in Moscow by three analysts from the Sberbank Investment Research unit – head of equity research Andy Smith, strategist Ovanes Oganisyan and senior analyst Anna Lepetukhina – and Sberbank CIB chief economist Evgeny Gavrilenkov.
Russia is set to become the biggest consumer market in Europe and the world’s fourth largest by 2020, and its annual total consumer sector activity may climb to $3trln by 2025, Sberbank researchers project.
Consumer sector valuations are “anomalously depressed” because of Russia’s oil risk image, they say.
They point out that the oil and gas industry employs just one million people while the country’s total workforce numbers 71m.
The core of the body of research launched by Sberbank is a report entitled “Consumer Speed Kings: Team Russia Leads the World” and analysing how the Russian investment case compares to other emerging markets, including Brazil, India, China, South Africa and Turkey, as well as the Eurozone and the United States.
The set of papers also includes the Sberbank CIB Ivanov Index, representing a 24-equity consumer basket updated daily, and the Sberbank CIB Ivanov Consumer Confidence Tracker, a pan-Russian bimonthly consumer survey.