Sep 01, 2013

Russia’s Hidden Potential

By the Emerging Markets Team

Russia’s Hidden Potential

The Russian equity market has again grabbed the headlines by offering some of the “cheapest” equities in the emerging markets. But are these bargain prices? Many of these company valuations are driven by inefficient, poorly managed and shareholder-unfriendly state-owned enterprises, which appropriately trade at deep discounts to the broader market.

However, there are exciting growth prospects to be found within the Russian market, such as Internet and other privately managed companies. We believe these companies offer investors attractive opportunities relative to the incompetent state-owned listed giants. Year to date, the market has rewarded these opportunities with superior returns, as can be seen in the chart below.

Source: Bloomberg

As growth investors, these are the opportunities we are looking to uncover when investing within emerging markets such as Russia.

This information is not intended to provide investment advice. Nothing herein should be construed as a solicitation, recommendation or an offer to buy, sell or hold any securities, market sectors, other investments or to adopt any investment strategy or strategies. You should assess your own investment needs based on your individual financial circumstances and investment objectives. This material is not intended to be relied upon as a forecast or research. The opinions expressed are those of Driehaus Capital Management LLC (“Driehaus”) as of September 2013 and are subject to change at any time due to changes in market or economic conditions. The information has not been updated since September 2013 and may not reflect recent market activity. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Driehaus to be reliable and are not necessarily all inclusive. Driehaus does not guarantee the accuracy or completeness of this informa­tion. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

About Emerging Markets

The Driehaus Emerging Markets team focuses on investing in emerging markets securities of all capitalizations, through the Driehaus Emerging Markets Growth, Driehaus Emerging Markets Opportunities and Driehaus Emerging Markets Small Cap Equity strategies.