The Tale of Two Towers, a Swimming Pool and a Car Park
Symbolism has always played an important role in the Russian psyche and nothing symbolized the bold promises of Moscow’s arrival as a financial super-power than the planned construction of the Russia Tower in the city’s own version of Canary Wharf: called Moskva-Citi. To say that the crisis is wreaking havoc on the economy is a misstatement which I will elaborate upon below. There is, in fact, an impressive degree of self-awareness that has, for example, allowed city planers to recognize the scarcity of existing resources (mostly financial) and react by transforming the plans to build the Russia Tower into a gleaming 530 space car park. At least 75 years later, this story is not far from another Moscow tower story about replacing grand plans for a tower with an odd outdoor swimming pool. In the 1950s, it was all that city planners could come up with after the original Christ the Savior cathedral was blown up in 1931 and the Palace of the Soviets which was started in 1937 was deemed un-finishable.
The central theme of Russia’s post 2008 emergence will likely be its impressive ability to address limitations on resources and a begrudging willingness to readjust plans and expectations. For investors in Russia this is a crucial factor when weighing the potential return on any investments whether it is private equity, apartments or small cap equities.
While the news from the U.S, UK and the rest of Europe hints at recovery in 2010 albeit lead by corporate spending and not the beleaguered consumer sector, the Russian recovery could take flight if the market addresses the need for both long-term and short-term debt financing and refinancing. As an example, most corporations in the US can expand without relying on debt to finance themselves. However, after 10 years of heady growth in Russia, its corporations are mired in heavy almost unfinancable debt. The strategy that drove the Russian economy higher was risky as it relied on cheap financing rates, strong commodity prices and a global banking system desperate to find a return on its capital. Today, capital from non-Russian banks is unlikely to flow cheaply and freely and Russian executives, businessmen and investors most go through the exercise of choosing the best project with their limited availbale credit.
The need to choose is not a concept that was widely accepted in the heyday of the Russian economic boom. It seemed like every project was do-able, financing could be arranged either by collateralizing ones equity or for private individuals their real estate or yacht.
Today, the investment climate in Russia can be characterized as dominated by opportunities in access to debt refinancing and restrucuturing. Credit related skills and a keen understanding of an enterprises ability to generate cash flow to service is debt is obviously an important component but so is an understanding of the ability of a company’s executives to manage their debt burden and mostly to pick the right investments.The opportunities in Russia will be harder to source and the key factor for success will be access to capital and a general recognition by the consumer, government and related enterprises that this project should be pushed to the top of the agenda. We should expect to see more "towers turned into parking lots" in the months ahead but that is not necessarily a bad thing.
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 | René Kuhn "Zurück zur Frau - Weg mit den Mannsweibern und Vogelscheuchen, ein Tabubruch", Luzern, 2009 |
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10.03.2010 | |
| Dieses Buch ist kein Ratgeber aus der pseudo-psychologischen Ecke, sondern eine Streitschrift, welche die Geschlechterbeziehung aus Männersicht... |
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Cinéfil, un must pour les yeux
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Neither East nor West
