WEST PALM BEACH, FL (HEDGECO.NET) – Russia’s capital markets have been climbing with amazing speed in recent months, drawing attention from investors worldwide and securing Russia’s place as the leading, and most lucrative,”emerging market” on the planet.

The new hedge fund, Greater Europe Deep Value Fund, will take advantage of the previously underestimated economic growth prospects.  The fund will open in May and close at the end of June this year.

The Greater Europe Deep Value Fund will have a lockup period of 3 years, which will allow it to make investment in illiquid, but highly profitable stocks. The Hedge Fund will be advised by Jochen Wermuth, who is also the managing partner of Germany-based Wermuth Asset Management.

In an interview with Reuters, Wermuth is quoted as saying “That will happen as the risk premium applied to them is reduced, as Russia’s overall credit rating and global perceptions improve.”  Russia is fast catching up with developed world countries due to its abundance of natural resources and strong workforce. Long-term growth prospects in Russia are better than for countries in the developed world, Wermuth expects price/earnings ratios for second and third tier stocks to go to between 9 and 12 from around 3 to 4 now over the next 3 to 5 years.

“Gross domestic product growth in dollar terms—around $3,000 (1,680 pounds) per head—may well triple over the coming five years due to real growth, high wage inflation and a stable exchange rate”, Wermuth said.

“Average monthly wages of currently only $327 could reach $1,000 a month … earnings of companies focused on the domestic consumers should triple too. Russia and Kazakhstan benefit from raw material resources whose prices continue to rise due to strong demand from China, India and others,” Wermuth said.

Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net

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