Oksana Bestuzheva, Deputy General Director of Gorizont Investment Company, told about the investment climate in Russia and the activity of Guild of Investment and Finance Analysts (GIFA).

The Russia Journal: Which sectors of the Russia market are most attractive for investment?

Oksana Bestuzheva: Over the last several years, foreign investors have developed firm preferences for certain sectors of Russian economy. Back in 1996, the proportions of investments in the industrial and financial sectors were comparable, and equaled 32 percent and 29 percent, respectively, but industry's share grew to 51 percent by the year 1999, the main recipients being the fuel and food sectors. Trade and public catering have been also receiving substantial amounts of investment. Engineering, metal processing, transportation and communications have seen increase in investment volume lately.

In the last five years, Moscow and Moscow Oblast have been losing momentum as the country's principal investment destination, while the Urals, Far East and Northwestern regions have seen considerable gains. This broadening of "investment geography" is indicative of the generally positive changes in the country's economic situation.

TRJ: What are the main obstacles that discourage portfolio investors from coming to Russia?

OB: Foreign investors still view Russia as a high-risk zone, though the recent upgrading of Russia's sovereign-debt rating represents a positive change.

Speaking of obstacles, the main ones are flaws in the legislation surrounding investment activities in Russia and the imperfection of Russia's judicial system. The enactment of the second part of the new Tax Code is expected to remove many contradictions, eliminate the possibility of unpredictable changes in the taxation system and, therefore, considerably improve the investment climate in the country.

Other obstacles include poor market transparency and poor development of the stock market. Last year's boom in corporate bonds may stimulate a growth in initial public offerings by companies needing funds to develop.

TRJ: Given the Russian market's uniqueness, is it possible for financial and investment analysts to apply international standards to their work?

OB: The Russian stock market has been attractive to foreign investors for quite a long time now. Despite the flaws in legislation and the poorly developed market infrastructure, Russian investment analysts successfully apply international standards to their work and provide trustworthy information on the production and financial state of Russian enterprises. Foreign investors are able to base their decisions on competent recommendations made in accordance with international standards.

TRJ: What particular measures are being taken to improve the professional level of financial and investment analysts in Russia?

OB: For a long time, Russian specialists had no other choice but to teach themselves and then take exams to obtain a CFA (Chartered Financial Analyst) certification from the American Association on Investment Management and Research. Professionals from many countries have criticized it for imposing American standards.

Beginning from this year, Russians will have the opportunity to take exams to obtain a CIIA (Certified International Investment Analyst) certification – a joint program of the financial analyst federations of Europe, Asia and Brazil. To obtain a CIIA certificate one has to pass examinations according to a program, which is the same for all 32 member countries, and a national exam.

The preparation of specialists and examinations are organized under the control of the Association of International Investment Analysts and national associations. Russia's national association is the Guild of Investment and Finance Analysts (GIFA).

TRJ: What are GIFA's plans for this year?

OB: GIFA, together with its partners who are leading Russian and foreign banks and companies, is running a program with the name of "International Certification of Specialists in Investment and Financial Analysis." The partners include the Eurofinance bank, CentroCredit bank, Baker & McKenzie law firm, Brunswick UBS Warburg company, investment companies Gorizont, Lukoil-Reserve-Invest, Region, Pro-Invest IT, Pro-Invest Consulting. Vneshtorgbank and NK Lukoil are considering joining.

Besides, GIFA is working on a system of advanced learning for specialists in finance, accounting and investment analysis who work at Russian enterprises and organizations. The system will comprise several levels, the highest of which will include preparation for the CIIA qualification exams.