Foreign investment growth in Russia slowed sharply to 18.4% y/y in Q3. According to RosStat data, total gross
foreign investment rose 39.4% y/y to USD 29.135bn in Jan-Sep.
This almost matches the full-2003 score (USD 29.7bn). However, while the absolute figure and growth rate remain impressive, sharp growth slowdown can be observed. In H1, growth made up 49.9%, thus in Q3 alone investment rose only 18.4% to USD 10.242bn.
In our view, the high base is largely to blame for the slowdown. FDI grew 19.8% to USD 5.59bn in Jan-Sep, but this represents an 11.2% y/y drop in Q3. Within FDI, growth rates receded slightly over the month. Still, capital investment grew a solid 2.2-fold to USD 3.649bn. It remains to be seen whether the full-year USD 8bn target set by PM Mikhail Fradkov would be met.
Given that investment outflow made up USD 17.93bn, net foreign investment stood at an admirable USD 11.2bn in Jan-Sep.
Another major factor hindering investment in Q3 was the banking crisis, spooking investors off the Russian scene until the smoke clears. Portfolio investment also gained markedly in Q3, rising 2.8-fold to USD 227mn. Other investment was raised 44.4% to USD 23.318bn, with Q3 investment keeping up pace at USD 7.891bn.
Total accumulated foreign investment rose 37% y/y to USD 73.4bn, with another USD 7.3bn added in Q3.