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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

Friday, Oct. 31


Put your grammar and logical thinking to the test in a fun and friendly environment during the British Book Centers Board Game Evening starting at 5 p.m. today. The event is free and all are welcome to attend.



Saturday, Nov. 1


The men and women who dedicate their lives to fitness get their chance to compete for the title of best body in Russia at todays Grand Prix Fitness House PRO, the nations premier bodybuilding competition. Not only will men and women be competing for thousands of dollars in prizes and a trip to represent their nation at Mr. Olympia but sporting goods and nutritional supplements will also be available for sale. Learn more about the culture of the Indian subcontinent during Diwali, the annual festival of lights that will be celebrated in St. Petersburg this weekend at the Culture Palace on Tambovskaya Ul. For 100 rubles ($2.40), festival-goers listen to Indian music, try on traditional Indian outfits and sample dishes highlighting the culinary diversity of the billion-plus people in the South Asian superpower.



Sunday, Nov. 2


Check out the latest video and interactive games at the Gaming Festival at the Mayakovsky Library ending today. Meet with the developers of the popular and learn more about their work, or learn how to play one of their creations with the opportunity to ask the creators themselves about the exact rules.



Monday, Nov. 3


Non-athletes can get feed their need for competition without breaking a sweat at the Rock-Paper-Scissors tournament this evening at the Cube Bar at Lomonosova 1. Referees will judge the validity of each matchup award points to winners while the citys elite fight for the chance to be called the best of the best. Those hoping to play must arrange a team beforehand and pay 200 rubles ($4.80) to enter.



Tuesday, Nov. 4


Attend the premiere of Canadian director Xavier Dolans latest film Mommy at the Avrora theater this evening. The fifth picture from the 25-year-old, it is the story of an unruly teenager but the most alluring (or unappealing) aspect is the way the film was shot: in a 1:1 format that is more reminiscent of Instagram videos than cinematic art. Tickets cost 400 rubles ($9.60) and snacks and drinks will be available.



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