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Rudloff Says Russia Vote, Mideast May Deter Investors

Feb. 17 (Bloomberg) -- Russia's upcoming elections and political turmoil in the Middle East may dissuade investors from buying the nation's assets this year, said Hans-Joerg Rudloff, chairman of Barclays Plc's investment banking group.

Protests in North Africa in the past six weeks drove Tunisian President Zine El Abidine Ben Ali into exile and forced Hosni Mubarak to give up power in Egypt. Anti-government demonstrators rallied in Bahrain yesterday, while there were more clashes in Yemen and reports that unrest spread to Libya, the holder of Africa's largest oil reserves.

- - Russia, the world's biggest energy exporter, is scheduled to hold parliamentary elections in December and a presidential vote next year. The wealthiest 10 percent of Russians accounted for 31 percent of all income last year, while the poorest 10 percent had a 2 percent share, according to the Federal Statistics Service. One in 10 people earned less than 5,000 rubles ($170.90) a month, the statistics office said.

The difference in wealth distribution that fueled pro- democracy protests abroad "isn't only obvious in the Middle East," Rudloff said.

"Today we live in a world that is very transparent," he said. "It is not so easy to be oppressive. Everywhere, we are well advised to take these developments into account."

Stock Performance

Russia's Micex stock index has climbed 1.1 percent this year, beating the 2.5 percent loss for Brazil's Bovespa index, the 11 percent retreat for India's Sensex and the 3.7 percent drop in the MSCI Emerging Markets Index of 21 developing nations' equities. Russian stocks have trailed the 4.1 percent gain for China's Shanghai Composite index. The ruble has risen 4.5 percent against the dollar this year, the third-best performance among 25 emerging-market currencies tracked by Bloomberg.

"Huge efforts by many government officials to sell Russia as an investment opportunity, to convince Western investors that it's a good place, a profitable place to be" are paying off, Rudloff said.

Russia raised $3.3 billion this week selling a stake in VTB Group in the largest state asset sale since the bank's initial public offering almost four years ago. Prime Minister Vladimir Putin's government sold 10 percent of the bank to investors for 95.7 billion rubles, the country's second-biggest lender said in a statement. The sale was the first major deal in a three-year program aimed at raising about $34 billion to help plug a budget gap and lessen the government's role in the economy.


While the government's "cohesive message" has helped Russian stocks beat other emerging-market equities this year, that outperformance may not continue, Rudloff said. The Micex index has fallen 3.6 percent from a two-and-a-half year high on Jan. 17, a week before Egypt's street protests began. The index's price relative to reported earnings climbed to 9.6 on Feb. 7, the most expensive level since April, according to data compiled by Bloomberg.

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