Region/Countries: Europe, Russia Industry: Multiple Sectors Date: February 2017

Why this is important to Wisconsin businesses: Foreign investment into Russia has moved from a net outflow to a net inflow for the first time since 2012.

Since the beginning of November, international investors have been increasing their investments in the Russian stock market. According to Citibank (which has based its calculation on the Emerging Portfolio Fund Research, EPFR), the total amount of foreign investment in Russian stock in the week ending Dec. 22 was $120 million.

Since the beginning of the year, the total inflow of foreign investment in Russian stock has exceeded $727 million. This is the first positive annual result since 2012 (when foreign investors invested $410 million), and the highest result since 2010 ($3.3 billion). Significantly, according to estimates by Russian business daily Kommersant, which are also based on EPFR data, in 2016 foreign investors invested about $1 billion in emerging stock markets (including Russia's).

Foreign portfolio investors’ interest in the Russian market raised Russian stock indexes at the end of the year to a historic high. Over the course of 2016, the stock market index grew by 23.7 percent.

According to Bloomberg, in dollar value the index increased by 47 percent, demonstrating one of the best results among stock indexes in developed and developing countries. Only the Brazilian, Kazakh and Peruvian stock indexes grew more – by 59 to 63 percent.

OPEC's historic decision in November to limit oil production and the unexpected result of the U.S. presidential elections had a positive effect on Russian stocks. According to EPFR, in the six weeks after Donald Trump's victory, foreigners invested almost $1.3 billion, thus reversing the outflow of investment seen in the prior two and a half years. Projections call for the inflow of foreign investment in Russia to continue.