Net capital outflow from Russia has grown more than 1.5 times
In the first half of 2017, net capital outflow from Russia increased 1.7-fold to $14.7 billion, compared to $8.6 billion during the same period in 2016, as indicated in the data published on the official website of the Bank of Russia.
Analysts of the Central Bank explained that this trend is caused by activity in the banking sector connected to increases in residential customer accounts in early 2017, as well as the banks’ repayment of external debt obligations.
"Other sectors that saw some economic recovery, on the contrary, were importers of foreign capital," the Central Bank’s report says.
As of April 1, 2017, the volume of Russia's external debt increased by 2.3% (by $11.6 billion) to $ 525.7 billion since the beginning of the year. This increase in external liabilities is the result of the strengthening of the ruble and the purchase by foreign investors of sovereign shares on the secondary market, the total amount of which was $5 billion.
In early July, Kommersant reported that as of the end of February, foreign investors withdrew more than $1.6 billion from Russian stocks, which was a record outflow of foreign capital in recent times. According to the Emerging Portfolio Fund Research, cited by the newspaper, more than $83 million was withdrawn from funds focused on the Russian stock market during the last week of June. The newspaper stated that the Russian stock market "was among the outsiders," and that a larger withdrawal, of $4 billion was only recorded in China. However, the publication emphasized that China’s market is larger than the Russian market.
Analysts attribute this situation to a decrease in the attractiveness of ruble assets due to a lawsuit between Rosneft and Sistema PJSFC. Another reason is the unjustified expectations about the rapprochement between Russia and the United States after the election of Donald Trump as a President, as well as the introduction by the U.S. Congress of new restrictive measures against Moscow.
The Kremlin explained the growth in the outflow of foreign capital by the conjuncture and volatility and assured that this trend is not connected with the lawsuits between Rosneft and Sistema PJSFC. According to the press secretary of the Russian President, Dmitry Peskov, the lawsuit between these two companies "has nothing to do with the investment climate in our country."