May 24th, 2011

Yandex IPOs Despite Political Risks

Russian search engine Yandex debuted today on NASDAQ at $25 a share over it’s $20 its pre-IPO estimate. However, political risk looms large over its future performance. And smaller companies seeking capital from international markets face a tough environment. Nadia Popova writes:

Foreign investors are also becoming increasingly sensitive to political uncertainty ahead of Russia’s presidential elections in 2012. What’s more, lacking ruble liquidity has pushed local investors to start selling their current holdings, all the while showing little interest in buying new stocks.”

Paul Gregory of the Hoover Institute cautions investors to remember the Khodorkovsky trial when looking to Russia for big returns:

Let us hope the Khodorkovsky case will not be forgotten outside of Russia. The Council of Europe, Freedom House, and Amnesty International have concluded that Khodorkovsky was charged and imprisoned in a process that did not follow the rule of law and was politically motivated.”

“Any company considering investing in Russia should think twice. Those companies who invested in good faith in Yukos lost everything. They were politically expropriated. Major international companies, such as Shell and BP, have suffered arbitrary treatment at the hands of Russian officials and have no recourse. Companies considering entering the Russian market are assured that such things will not happen to them. They should realize that anyone doing business in Russia could find themselves in Khodorkovsky’s shoes.”

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