(KBHM) March 4th, Russian Prime Minister Vladimir Putin won six more years as President. Putin has been in power the last 12 years, the last four as Prime Minister. He received 62 percent of the vote, amid rumours of fraudulent activities. The case of fraud during the December parliamentary elections have still not been addressed, and demonstrations are believed to carry on.
According to President Putin's campaign manager, Stanislav Govorukhin, the election was the cleanest elections in the “entire history of Russia”. This remains to be proven...
Personal opinion aside, it looks like investors are more than satisfied with the election results. Russian equities reached their highest level in more than seven months. Investors are hoping Vladimir Putin’s return to presidency will extend a rally in the developing world’s cheapest stocks. The MICEX, (Moscow Interbank Currency Exchange, for those of you who are slacking) trades at the cheapest valuation of the 21 emerging markets tracked by Bloomberg. According to S&P this is due to the lack of political and financial transparency. This is thought to improve in the future, but as I was told by a gentleman with deep knowledge of the matter: "It will take generations to improve, as corruption is not part of the system, it is the system".
I read an article saying: "A Putin victory is good for equities that have chief shareholders closely associated with the incoming president..." To be honest, you can only pick a handful of MICEX companies that President Putin does not have a certain influence towards.
The most globally-traded Russian stock is Gazprom (GAZP:RU). As an analyst told me a while ago, "if you buy Russia, you buy Gazprom". Who was the Chairman of the Gazprom Board 2000-2001 and 2002-2008? Our good friend Dmitry Medvedev. So, under the theory that Putin-influenced companies will thrive under his reign + oil trading at $125/bbl - should we be shouting BUY GAZPROM?
