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Russia Is Cheap Says Goldman's O'Neill; GLG Bets on Ruble Gains

Cash, Coins, Line GraphMarch 17 (Bloomberg) -- Russian markets are "cheap" according to Goldman Sachs Asset Management Chairman Jim O'Neill, while hedge fund GLG Partners LP is betting on gains in the country's currency.

Russia is the favorite emerging market for both O'Neill and Bart Turtelboom, GLG's co-head of emerging markets, they said at the Bloomberg Link Hedge Fund Conference in London today.

GLG Partners is betting on gains in Russia's ruble and is "one of the biggest trades we have on" as the nation has abundant natural resources and will see a number of initial public offerings, he said.

Russia's currency, whose world-beating rally earlier this year was fueled by surging oil prices, has retreated 0.3 percent versus the dollar because of concern the economic effects of the earthquake in Japan will sap demand for crude imports. The ruble depreciated for the third day this week against the central bank's dollar-euro basket, losing 0.3 percent to 33.8276 as of 1:42 p.m. in Moscow.

Russia's governance issues are "gradually being cured, but it will take time," said Turtelboom.

Blackstone Group LP, the world's largest private equity firm, doesn't have any investments in Russia "that I know of," John Studzinski, a senior managing director at the firm, said at the Bloomberg conference today.

"We know the government is trying to make the environment more friendly," he said. Russia's relative risk is "case by case, industry by industry."

The Russian government is setting up a $10 billion fund aimed at boosting investment by overseas buyout firms in the country, two people with knowledge of the matter said March 7.

Leveraged buyout firms have led $1.5 billion of takeovers this year in Russia, about half the $3.6 billion of investments announced in China, according to data compiled by Bloomberg.

Carlyle Group LP, one of the world's biggest private equity firms, shut its Moscow office in 2005, a year after opening it, saying the country was too risky.

©2011 BLOOMBERG L.P. ALL RIGHTS RESERVED; article first appeared at http://www.bloomberg.com/news/2011-03-17/russia-is-cheap-says-goldman-s-o-neill-glg-bets-on-ruble-gains.html

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