However, strong domestic macroeconomic and microeconomic fundamentals should help to ease investor concerns, say analysts.
With a sizeable chunk of the headline initial and secondary public offerings from the country performing poorly since launch, many prospective issuers are said to be reconsidering their issuance plans, preferring to wait for better market conditions later in the year or in early 2008.
It could prove a high-risk strategy, however – the March 2008 presidential elections are widely expected to increase the perceived political risk attached to Russia. Although the recent government reshuffle in Russia, with previously obscure technocrat Viktor Zubkov appointed as prime minister, barely caused a ripple, some prospective offerings could be frozen out of the markets if there is a heightened sense of uncertainty surrounding the Russian economy in the run-up to next year’s poll.
Although $25 billion out of the forecast $30 billion-worth of stock offerings from Russia in 2007 has already been launched, the market environment for further issuance looks far less friendly than before the summer. Of the big stock offerings from the country, a number are already trading well down on their issue prices, muddying the waters for those companies that had hoped to come to market in the third and fourth quarters.