By Andrei Skvarsky.

Renaissance Capital plans to hire a staff of 15 by the end of 2010 for an office the Moscow-based investment bank has just set up in Hong Kong.

The employees will include sales and trading staff and four or five senior investment banking professionals with a focus on metals and mining, Rencap said in a news release.

The office will distribute securities from Russia, Central Asia, Eastern Europe, Africa and other emerging markets to institutional investors, as do the London and New York offices of Rencap, which also expects to have a light investment banking presence on the ground in Beijing by the year end.

“Russia is the largest commodities producer in Asia. Asia, and China in particular, is becoming the world’s largest consumer of commodities,” said Jeremy Sparrow, a former head of equities and international sales at Rencap who has been seconded from London to lead the Hong Kong office as chief executive.

Rencap chief executive Stephen Jennings said: “The centre of global capital for emerging markets is moving east, and we expect Hong Kong to be the greatest beneficiary of that process.”

“There are large pools of Asian capital, both sovereign and private, looking for commodity-driven ideas,” said Sparrow. “Renaissance Capital has a dominant position in these resource-rich geographies and we believe we are ideally positioned to intermediate these flows.”

Rencap is in the process of obtaining licences from Hong Kong’s Securities and Futures Commission for its office.

By Ivan Anderzhanov

Russian investment bank VTB Capital intends to triple its Asian business by launching operations in Hong Kong and expanding further into China, Vietnam and India,  according to a Reuters report.

VTB Capital currently employs about 30 people in Singapore, its only Asian office, which focuses on placing Russian government and corporate debt with Asian investors. It intends to raise that number to 100 over the next three years by expanding into equity capital raisings, trading and M&A.

VTB Capital currently employs about 750 people globally, up from 600 at the start of 2009. The bank has previously said it will boost numbers by 40 percent this year.

By Ivan Anderzhanov

Russian investment bank Renaissance Capital has hired the former global head of equity derivatives at Credit Suisse Christopher Carter to lead its expansion into the asset class.

The senior recruit is the latest big name hire by Rencap, which has bounced back from the crisis by expanding aggressively into new emerging markets and by spending to secure new talent.

Carter, who was at Credit Suisse until 2007, has been appointed to a new role as global head of equity derivatives, convertibles and delta one, according to a statement.

The Moscow-based banker, who was most recently at the hedge fund Black Tower Capital, has been charged with building the firm’s international business outside Russia, including sub-Saharan Africa.

Nick Andrews, global head of equities at Renaissance Capital, said in a statement: “Chris’s unparalleled knowledge of the Asian and European markets, his impressive management track record in derivatives trading, sales and structuring will be extremely  important to us.”

By Ivan Anderzhanov

East Capital is diversifying from its Russian and Eastern Europe focus by acquiring Asia Growth Investors (AGI), a fund management company focussed on China.

AGI, which is Swedish owned like East Capital, was founded in 2004 by fund manager Gustav Rhenman.

East Capital, which managed about $6 billion,  said AGI’s investment strategy is  complementary to its own as they combine frequent travelling in the region with fundamental equity research as the basis for stock picking.

Peter Elam Håkansson, founder of East Capital, said in statement: “We believe the main growth in the world will come from Eastern Europe and China. Having two specialised investment teams under the same roof covering these two exciting parts of the emerging markets universe will be a very valuable additional offering to our investors.

Karine Hirn, one of East Capital’s founding partners, will relocate to Shanghai August 2010 in order to follow the developments in China.

East’s investment team will continue to focus on Eastern Europe while the China funds will be managed by the separate investment team of China specialists.

Completion of the deal is expected in June.

By Ivan Anderzhanov

The emerging markets investment house Ashmore today launched a Greater China Fund to invest in Chinese equities.

The fund has a US dollar base currency and will invest primarily in on-shore Renminbi denominated investments permitted under the country’s Qualified Foreign Institutional Investor (QFII) scheme.

Ashmore was granted a QFII licence by the Chinese Security Regulatory Commission in September 2009, and has more recently been allocated a quota of $200 million by the regulator.

The London-listed group said the fund will invest directly in the domestic market and provide access to the local “A” shares. In addition to equities, the fund can invest in fixed income and cash. As well as benefiting from a much wider and more liquid investment universe, including local equity and credit exposure, investors will benefit from short term currency appreciation and longer term structural upside.

Jerome Booth, head of research at Ashmore, said in a statement: “As one of the select financial institutions who have been granted a QFII licence, we’re very encouraged by this quota allocation. This reinforces our commitment to developing our investment capabilities in the Chinese domestic market and underpins our confidence in the growth of the region.”

Ashmore manages about $31.6 billion ) in pooled funds, segregated accounts and structured products.

By Marcus Williams in London

Russian aluminum maker UC Rusal today reportedly raised $2.24 billion from its Hong Kong and Paris initial public offerings, after the company priced the shares around the middle of the range indicated in marketing literature.

Bankers said the listing could led to a trickle of further Russian listings in Hong Kong but they doubt it will turn into a tide.

Rusal, the world’s largest aluminum producer by output, priced its 1.61 billion shares at 10.80 Hong Kong dollars ($1.39), according to several media reports today.

The indicative range for the IPO was 9.10-12.50 Hong Kong dollars. If the over-allotment or “greenshoe” option is exercises, Rusal could raise up to $2.56 billion, Dow Jones reported.

Hong Kong stock market regulators restricted the share offering to institutional investors and a few wealthy individuals, owing to the company’s $14.9 billion debt load, operational losses, and other risks.

The unknown quantity for other Russian companies looking east is whether Chinese retail investors will be interested in coughing up to invest in Russian companies, which are not always beacons for corporate governance.

Westerns bankers said they doubted whether Hong Kong could yet challenge London’s position as the pre-eminent destination for Russian and international listings.

A survey earlier this week of 17 analysts by Merlin PR showed the LSE is the top choice, followed by the Hong Kong stock exchange, NYSE Euronext and then Deutsche Boerse AG .

Andrey Kuznetsov, market strategist at Russian investment bank Troika Dialog, said the LSE “will continue to be the international market of choice” for Russian companies over the next 12 months. “Recent defections from New York Stock Exchange, such as Tatneft, underline the fact that maintaining a listing in London continues to be cheaper than in New York,” he added.

Most of the analysts surveyed said they expect international listings by Russian companies to rise this year and return to levels seen before the financial crisis.

Funnily enough, it was the analysts at the international banks who are more bullish on the Russian equities than their Moscow counterparts.

By Jason Corcoran

Ashmore Investment Management, the specialist emerging markets investment manager, has today been granted a license by the Chinese financial regulator to access their domestic funds markets.

The QFII licence and its pending quota permit Ashmore to invest in domestic Chinese securities across a range of underlying asset classes, listed on the Shanghai and Shenzhen exchanges.

Jerome Booth, head of research at Ashmore said: “The licence is part of our strategy to develop our investment capabilities in the Chinese domestic market and is an important step in our long-term commitment to expanding our presence in the region.

EmergingMarkets.me recently revealed that Ashmore is also opening a sale office in Japan and is scouting for staff for a Moscow operation, which may open by the end of this year or early next year.

Ashmore, which manages about $31bn, last year opened operations in Brazil and Turkey in a bid to increase its local presence in emerging markets, to raise more capital and to add more country-focused funds.

By Jason Corcoran in Moscow

MICEX and the Shanghai Stock Exchange (SSE) have today announced a memorandum of cooperation in the sphere of creating joint indices on the Moscow exchange and to launch exchange traded funds (ETFs) in China.

A delegation of the Shanghai Stock Exchange visited the MICEX on October 12. The two bourses agreed that China Securities Index Company Ltd. (CSI) will be the exclusive distributor of the MICEX index in China for companies intending to launch index funds based on the MICEX indices.

In 2007,  MICEX and Hong Kong Exchanges and Clearing agreed to cooperate in developing exchange-based market when they signed a memorandum of understanding.

Rusal, the Russian aluminum producer, has recently applied to sell shares on Hong Kong’s exchange. Moscow-based Rusal would be the only Russian company with shares trading in Hong Kong.

By Ivan Anderzhanov in Moscow

Standard Bank, the emerging markets banking group, has raised $1bn loan facility with four major Chinese banks in Macau today.

The four banks are Industrial and Commercial Bank of China (Macau) Limited; Bank of China; China Development Bank and China CITIC Bank.

The club deal was self arranged by Standard Bank and co-ordinated by the Industrial and Commercial Bank of China (ICBC) and ICBC (Macau) Limited, a subsidiary of ICBC which recently started operations in this special administrative region of the People’s Republic of China. This is a debut term loan for Standard Bank’s fund raising in the Asian market.

Jacko Maree, Standard Bank group chief executive, said: “The deal reflects the trust that Chinese banks have in Standard Bank, Africa and emerging markets, despite the tough global capital markets.”

He said that Standard Bank’s strategic partnership with ICBC played a huge role in putting together the 5-year facility, repayable in a bullet capital single tranche at maturity.

“This deal will serve as a platform for future cooperation between Standard Bank and these banks across a range of different banking products and geographies to support Chinese companies going global into emerging markets,” added Maree.

Standard Bank, which is 20% owned by China’s biggest lender, ICBC, acquired a 33% stake in Russia’s Troika Dialog investment bank earlier this year.

By Ivan Anderzhanov in Moscow

Global emerging market funds were hit by net outflows of $946m this week as investors banked profits following concerns over liquidity in China.

Emerging markets registered net outflows of $1.63bn for the week to 19 August,  according to fund trackers Emerging Portfolio Fund Research. This was the first outflow in eight weeks and compared against last week’s inflow of $571m.

Global emerging market funds led the laggards with an outflow of $950m against inflows of $293m a week earlier.  Asian funds came next, with outflows of $811m, against the previous week’s outflows of $27m. China funds suffered the most among the Asian funds, accounting for $640m of the total $811m of net outflows from Asia funds, while India funds still attracts capital.

EPFR said China’s growth had been the catalyst for flows into emerging market funds in recent months. It said: “During the third week of August, however, doubts about the quality of the loans doled out at breakneck speed by Chinese banks during the first half of 2009 prompted investors to book profits and take some of their recent gains off the table.”

LatAm and EMEA funds performed well, in spite of the correction.  LatAm funds pulled in $74m, lower than the previous week’s $225 mln, while EMEA funds ended the week with inflows of $54m, slightly under the previous week’s $80m.

Andrei Bogdanovich, an analyst at UralSib, said in a note that the outflows outside of China were ‘technical’.

He said in at note: “The S&P 500 made gains on each of the last two days of the reporting week to19 August, bouncing from its recent fall on the back of better-than-expected leading US indicators and an oil-price surge due to a surprising drop in oil reserves. The RTS index saw almost the same movement.

“However, the fact that its fall has been technical and a medium-term upward trend is in play meant that overall fund flows were, as we had expected, meaningless, with the exception of China.”

By Jason Corcoran in Moscow

Fund managers are pouring into emerging markets and are shifting away from China towards Russia, according to the Bank of America Securities-Merrill Lynch August survey.

Merrill Lynch’s Risk and Liquidity Indicator, a measure of risk appetite, rose to 41, the highest in two years, with investors preferring an overweight in emerging markets than any other region. Some growth optimism for China, one of the driving forces of the original turnaround, has dipped slightly, as investors shift towards Russia and away from China.

Investors would rather be overweight in emerging markets than any other region, and by some distance. A net 33% of the panel prefers to be overweight in emerging markets while investor consensus is to remain underweight in the developed economies of the US, the euro zone, the UK and Japan.

The fund manager survey, which polled 204 investors who manage a combined $554bn under management, showed equity overweight positions rose to a net 34% of their portfolios in August, their highest since October 2007, from 7% last month. Average cash balances have also fallen to 3.5% from 4.7%, which is their lowest level in two years.

Fund manager Market Mobius plans to double Templeton Asset Management emerging-market assets to $50bn within two years. China is the top pick of Mobius and many other managers with see it as the key catalyst  to a global recovery.

Jerome Booth, head of research at Ashmore Investment, has caused waves with his recent suggestion investors should increase their level of exposure to emerging markets to 35-50% based on the share of global GDP.

By Jason Corcoran in Moscow

Emerging markets fund specialist Ashmore Investment Management is expanding its global footprint by opening offices in China and Japan and potentially in Russia.

A source close to Ashmore said it was already recruiting for an operation in China, along with a sales office in Japan.  A formal presence in Russia is expected to take shape at the end of this year or early in 2010, added the source.

Ashmore, which manages about $25bn, last year opened operations in Brazil and Turkey in a bid to increase its local presence in emerging markets, to raise more capital and to add more country focused funds. In 2007, Ashmore entered into a joint venture with private equity firm Alchemy Partners to invest in distressed debt and special opportunities in India.

Jerome Booth, head of research at Ashmore, declined to comment on specific geographical expansion plans. In an interview with Financial News, he said: “Our overall objective is underpinned on the need to grow and so far a lot of that has been organic in Brazil, Turkey and India. It’s a natural extension to build on further.”

Ashmore, which has traditionally raised most of its capital from US and European institutional investors, is attempting to raise money in emerging markets. Booth added: “We already manage money for central banks and sovereign wealth funds but eventually hope to have manage funds for small investors in emerging markets.”

Booth said the group had already succeeded in its primary goal of convincing US pension funds to be make significant allocations to emerging market devt. Overall, Booth said Western fund said be allocating 35-50% to emerging market investment classes.