WITH the threat of further Western economic sanctions hanging over Russia, foreign investors are deserting Moscow’s equity markets and funneling cash into other BRICS states, with China a standout beneficiary.

    Russia has performed worse than any other big emerging market so far in 2014, with stocks down 17 percent in dollar terms and the rouble losing 9 percent. In the bond market too, anyone who bought rouble-denominated debt this year would have lost 14 percent, according to JP Morgan’s GBI-EM index.

    Sanctions placed on Moscow for its perceived role in the Ukraine crisis do not yet bar holding shares of Russian companies that are viewed as close to the Kremlin.

    But investors have been exiting all the same, fearing more sanctions that could pull other Russian assets into the net.

    Data, which may not capture the latest exodus, shows that more money left Russian stocks and bonds in mid-July than at any other time in the last six months.

    Investors pulled US$353 million from Russia equity funds in July and US$172 million in the week after a Malaysian passenger plane was brought down July 17, according to fund tracker EPFR. Boston-based EPFR is estimated to capture some 15 percent of global fund flows.

    (SD-Agencies)