What's Driving Russia?
Russia’s publicly-traded gold companies may more than double their production in the next five years, and the country’s uranium output may increase even more over that same time period.
That’s the outlook offered by the Moscow-based investment bank Troika Dialog in a recent research note.
The way Troika sees it, Russia has four key growth drivers at work for investors – low penetration in the domestic sectors, mining growth, fiscal reforms and market consolidation that allows companies to get bigger and benefit from scale.
By sector, publicly-traded retail companies are seen as most poised for strong growth through 2015 – Troika predicts 25 percent annual growth for the five years. Rationale: organized retail only accounts for 40 percent of sales, compared to more than 90 percent for Europe as a whole.
The same low-penetration story is seen in broadband (6 percent nationwide), banking (few people have credit cards or bank loans), automotive (44 cars per 100 households, well less than half of Germany’s rate), pharmaceuticals (per-capita spending only 25 percent of Europe’s rate) and more.
Rising commodity prices, which in the past decade had been Russia’s biggest growth driver, are not seen as much of a factor in the next five years. Instead, mining sector growth is expected to be more a story of production growth.