What’s Driving Russia?

Russia’s publicly-traded gold companies may more than double their production in the next five years, and the country’s uranium output may increase even more over that same time period.

That’s the outlook offered by the Moscow-based investment bank Troika Dialog in a recent research note.

The way Troika sees it, Russia has four key growth drivers at work for investors – low penetration in the domestic sectors, mining growth, fiscal reforms and market consolidation that allows companies to get bigger and benefit from scale.

By sector, publicly-traded retail companies are seen as most poised for strong growth through 2015 – Troika predicts 25 percent annual growth for the five years. Rationale: organized retail only accounts for 40 percent of sales, compared to more than 90 percent for Europe as a whole.

The same low-penetration story is seen in broadband (6 percent nationwide), banking (few people have credit cards or bank loans), automotive (44 cars per 100 households, well less than half of Germany’s rate), pharmaceuticals (per-capita spending only 25 percent of Europe’s rate) and more.

Rising commodity prices, which in the past decade had been Russia’s biggest growth driver, are not seen as much of a factor in the next five years. Instead, mining sector growth is expected to be more a story of production growth.

Tim Steinle recently took a research trip to the Krasnodar region of Russia to discover more information about the growing retail sector. Watch what Tim had to say following his trip.

About Frank Holmes 263 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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