Taking stock

Posted on 20 Mar 20

We recognise that the continued spread of Coronavirus, COVID-19 has led to extraordinary and challenging times for many countries and their citizens.

Coronavirus disease (COVID-19) and the oil price shock

Posted on 9 Mar 20

Global markets are undergoing a period of increased uncertainty on account of the spread of coronavirus disease (COVID-19).

Presidential address to the Federal Assembly

Posted on 16 Jan 20

President Vladimir Putin delivered the annual presidential address to the Federal Assembly for the first time at the beginning of the year, on 15 January 2020.

The USD 100bn question: Who really owns Surgutneftegas?

Posted on 20 Dec 19

Addressing the 2017 St. Petersburg International Economic Forum, Alexander Branis (Chief Investment Advisor) joked that there are three types of ownership in Russia; private, state-owned and “nobody knows which” referring to Surgutneftegas.

Inflation and interest rates

Posted on 20 Dec 19

For the last 9 months, we have seen a marked decline in inflation.

Perception versus reality revisited

Posted on 18 Sep 19

The portrayal of Russia is often very one-sided, filled with stereotypes and negative assumptions. A recent Financial Times article on four Russia-focused books was prefaced with the text below. Whilst this is the standard image that most people have of Russia, we would argue it is a misleading image.

State-owned enterprise dividend update – onwards and upwards

Posted on 18 Sep 19

Russia’s march towards better corporate governance and returns to shareholders continues and is even gathering pace.

Socially Conscious Investing

Posted on 31 Jul 19

Prosperity Capital Management (PCM) believes that good corporate governance, high standards of environmental protection and responsible social policies are indicative of efficient management. Therefore, we do consider ESG related issues as part of our investment process.

Shareholder dispute in Vostochny Bank results in multiple legal cases

Posted on 1 Mar 19

On 14 February 2019, founder Mr Michael Calvey and three employees of Baring Vostok Capital Partners (“BVCP”) were detained and subsequently arrested by Moscow authorities alongside two other individuals in a large-scale fraud investigation in relation to Vostochny Bank.

The relationship between the Russian ruble exchange rate and the oil price

Posted on 26 Dec 18

The Russian economy has been gradually diversifying away from oil and gas despite the massive and highly profitable production of hydrocarbons in the country.

Company of the month; Gazprom Neft

Posted on 26 Dec 18

The group of leaders of the Russian oil industry changed in 2017 as Gazprom Neft (SIBN RX) surpassed Surgutneftegaz by production and became the third largest oil company in Russia.

Pension reform, infrastructure investment, market and dividend updates

Posted on 4 Jun 18

Shortly after the formation of the new government, President Putin decided to use the recent strong confirmation of his mandate to push through pension reform.

Russian presidential election 2018 – the outcome was never in doubt

Posted on 21 Mar 18

I have witnessed six Russian presidential elections and in most cases there has been little excitement. The most uncertain was the 1996 election where Yeltsin's unpopularity gave the communists a real chance of winning.

Russian sovereign debt elevated to investment grade rating

Posted on 1 Mar 18

Founder exits 29.1% stake in Magnit to VTB

Posted on 20 Feb 18

The Russian investment and food retail communities were left surprised by Mr Sergey Galitskiy’s announcement on Friday 16 February 2018 that he would sell a 29.1% stake in Magnit to the Russian state-owned bank VTB for RUB 138bn (c. USD 2.45bn).

Myth and reality; share of the government in the Russian economy

Posted on 15 Nov 17

In recent years, there has been considerable discussion over the size of the Russian government’s participation in the country’s economy. Estimates of up to a 70 percent state-share in GDP have become conventional wisdom, whilst such figures are entirely incorrect and are calculated in a wholly inaccurate manner.

State-owned enterprise and dividend reform

Posted on 26 Sep 17

Dividends clearly form one of the most important drivers of shareholder value for any company. They are particularly important in cases when there are some justified doubts as to the economic efficiency of the reinvestment of earnings, such as is the case with certain Russian state-owned enterprises.

Corruption in Russia; perception versus reality

Posted on 26 Sep 17

In some way, Russian corruption represents the nexus of Russia-related stereotypes floating around in the international and local media as well as in the minds of many investors. Whilst many pretend to have it, there is obviously no hard data available to describe the issue. However, below we offer our own experiences and discuss our views on the matter;

US-Russian relations after the US presidential election

Posted on 3 Mar 17

A ‘strong and enduring relationship’ or more of the same?

Corporate governance of state-owned enterprises

Posted on 2 Feb 17

For years, Russia had the appearance of a low-yielding equity market - at least in the eyes of those who looked at it through the prism of the MSCI and similar indices.

Seeing the wood for the trees

Posted on 28 Sep 16

It is now twenty years since the launch of the Russian Prosperity Fund and twenty-three years since I first started investing in Russia. Often, people ask me how the outcome compares with the expectations I held when we started.

A hack job

Posted on 28 Sep 16

Having invested into Russia and the Former Soviet Union for twenty years, it is fair to say that we have learnt to treat much of what the mainstream media writes and says about the region with considerable and justifiable suspicion.

A review of recent corporate governance and regulatory changes

Posted on 28 Sep 16

Over Prosperity’s twenty-year experience of investing into Russia, corporate governance has represented the principal risk.

Russia is not an enemy

Posted on 28 Sep 16

The occasion of Prosperity’s 20th anniversary provides a reason for us to offer a longer perspective on international relations and Russia’s place within the international system.

A real breakthrough in the corporate governance of state-owned enterprises

Posted on 28 Sep 16

For years, Russia had the appearance of a low-yielding equity market - at least in the eyes of those who looked at it through the prism of the MSCI and similar indices.

Cost analysis at Russian state-owned enterprises

Posted on 6 Jul 16

We have previously analysed how Russian companies have addressed the prevailing economic challenges and how this has led them to improve efficiency. Private companies have, logically, led the race, as they are, on average, more flexible and profit-oriented.

Consolidation in the Russian food retail sector

Posted on 6 Jul 16

As in many of the country’s industries, Russia’s privatisation process led to a Darwinian ‘survival of the fittest’ process. Following the incorporation and privatisation of all stores individually, millions of companies and entrepreneurs were created.

Major oil producers in a low oil price environment

Posted on 6 Jul 16

In recent months, increasingly exaggerated predictions of the downside to the oil price have given way to more reasonable forecasts.


Posted on 6 Jul 16

The direct effects of ‘Brexit’ on Russia are few. Russia may well, however, be subject to global developments in light of the decision by the British people to leave the European Union.

Russia and the road to Damascus

Posted on 19 Jan 16

We have recently seen Russia engage in the Middle East, specifically with the intent of helping the Syrian government fight the Islamist forces that threatening to overthrow President Assad and create a semi-state in Syria and Iraq.

Cost-response to economic challenges; portfolio companies adding intrinsic value

Posted on 9 Dec 15

Prosperity has long argued that economic challenges in Russia lead to ever greater efforts by management to make companies more efficient

Pursuing our minority shareholder rights through the Russian courts

Posted on 9 Dec 15

When Prosperity seeks to explain how we deal with corporate governance issues through filing and regularly winning court and regulatory cases in Russia, we are met with scepticism, if not disbelief, by many institutional investors, prospective clients and even some of our investors.

Us and them

Posted on 22 Sep 15

We have compared Prosperity fund’s principal holdings with some of the world’s most prominent players in the same sectors

Déjà vu

Posted on 22 Sep 15

The current Russian market environment reminds me somewhat of my wedding. My wife, who is an excellent negotiator, had arranged for a very attractive accommodation price at the foremost hotel in Acapulco, where we were married. Some guests, seeing the low rate, concluded that the hotel could not be good as it is was too cheap a price and so booked themselves into a worse hotel for twice the cost. This is seemingly indicative of how some investors appear to think; Russian shares are so cheap that they simply must be bad. Let's instead buy Tesla and Uber - that is, after all, what the people who can see the future do.

The Mriya debacle; a letter to shareholders

Posted on 22 Sep 15

An update on evolving events in Ukraine

Posted on 30 Apr 14

With this being the fourth update that Prosperity Capital has issued on Ukraine, I will not reiterate all that has previously been noted. For convenience, we have included links to our previous commentaries at the base of this section of the Prosperity Newsletter.

Important steps forward in the development of corporate governance standards

Posted on 30 Apr 14

It is important to not lose track of the continued improvements in Russia through the current din over international relations. These positive changes are far more relevant for long-term investors in the country – like Prosperity Capital and our clients.