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Asia Wins in Sanction War

By Danila Bochkarev

Published: August 28, 2014 (Issue # 1826)



  • Although Asian countries are unlikely to replace the EU in the short- and mid-term future, there are many signs that they will do so in the long term.
    Photo: Nicolas Lannuzel / Wikimedia Commons

Relatively affordable Western financing alongside London's role as Russia's de facto financial capital had been the two pillars of the Russian economic system.

But Western sanctions on long-term financing for Russia's state banks and some of its energy companies such as Novatek and Rosneft has increased the cost of capital and complicated project financing. Now London can no longer be considered to be a "safe haven" for Russian money.

It is possible, of course, that sanctions will be short-lived. However, the sanctions have already triggered tectonic shifts in Russia's financial mindset and served to immensely strengthen Russia's ties with Asia. In a strange twist, Beijing is emerging as a major winner in the current Ukraine crisis, while other Asian countries might benefit as well.

Consequently, although Asian countries are unlikely to replace the EU in the short- and mid-term future, there are many signs that they will do so in the long term. Russian wealth is already fleeing to the new "safe havens": Singapore, Hong Kong and Shanghai.

In 2012 the amount of assets under management in Singaporean banks reached $1.29 trillion, making Singapore an attractive alternative to the Swiss accounts that Russians have favored. A number of Russian companies such as Gazprom and Rosneft have already established a solid presence in Singapore, and their number is likely to grow.

And while Singapore is emerging as a "new Switzerland," Hong Kong is emerging as a new financial center for Russian companies. Hong Kong is particularly attractive because it combines the predictability of English law with a direct access to the Chinese economy.

In January 2010 the world's largest aluminum company, RusAl, became the first Russian company to organize an IPO on the Hong Kong Stock Exchange. Gazprom has also held talks about a Hong Kong listing and may use the yuan to finance its operations in Asia. In May 2014, Russian state bank VTB conducted its first transition in yuan.

Hong Kong currency's reputation for stability also attracts foreign businesses. On July 31, Russia's leading nickel producer Norilsk Nickel announced the company's decision to transfer a sizable amount of its liquidity into Hong Kong dollars. Russian mobile operator MegaFon has already transferred 40 percent of its liquidity into HK dollars.

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ALL ABOUT TOWN

Thursday, Oct. 2


The celebration of the bicentennial of the birth of Mikhail Lermontov continues with todays free exhibition in the citys Lermontov Library at 19 Liteiny Prospekt. Titled Under the Rustling Wings, the temporary exhibition will feature the costumes and scenery used in the 1917 production of Lermontovs play The Masquerade, which he wrote in 1835 when he was only 21 years old.



Friday, Oct. 3


Learn more about how to manage and evaluate employee performance during SPIBAs Human Resources Committee meeting this morning on Employee Assessment: Global and Local Trends. Starting at 9:30 a.m., the discussion will touch on such topics as the partnership between HR and business, reliable assessment strategies and more, with Tatiana Andrianova, the head of the SHL Russia and CIS branch in St. Petersburg, as the featured guest. Confirm your participation by Oct. 2 by emailing office@spiba.ru or calling 325 9091.


AmChams Procurement Committee Meeting is at 9 a.m. this morning in their office in the New St. Isaac Office Center on Ulitsa Yakubovicha.



Saturday, Oct. 4


Wine and cheese lovers will get their chance to revel during Scandinavia Country Club and Spas Wine Market Weekend. Going on today and tomorrow, wining diners can listen to live music, take part in culinary classes and, of course, sample a variety of fine wines from around the world. The cost of admission is 400 rubles ($10.30) for adults and 200 rubles ($5.15) for children.



Sunday, Oct. 5


Look for the latest fall fashions at the Autumn Market today in Freedom Anticafe at 7 Kazanskaya Ulitsa. The minimarket plans to offer clothes more flattering than the puffy jackets that are a staple of the citys cold-weather fashion, while offering the same amount of protection from the biting winds blowing off of the Baltic.



Monday, Oct. 6


SKA St. Petersburg, the citys KHL affiliate, welcomes Slovakian club HC Slovan in a match-up tonight at the Ice Palace near the Prospekt Bolshevikov metro station. The puck drops at 7:30 p.m. and tickets can be purchased on the clubs website or in person at either the arenas box office or the clubs merchandise store on Nevsky Prospekt.



Tuesday, Oct. 7


Learn more about Russias energy industry at the St. Petersburg Energy Forum that begins today and runs through Oct. 10. Attracting industry experts and political and business representatives, the forum plans to welcome more than 350 plus companies and their representatives to discuss the future of Russias largest economic sector.



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