The "Russia's investment outlooks for a new presidential term" conference organized by RBC took place in Davos (Switzerland) on March 17-21. The forum focused on the proposed reforms in the banking sphere, prospects of the Russian stock market and practical issues of investment activities and the possible terms for the next default.

Foreigners proved to be interested in working in Russia, and they were not afraid of the recent governmental reshuffling. Investors representing the largest European financial institutions were worried about the fact that Russian businessmen themselves were actively selling their assets. Barclays Capital Chairman Hans-Joerg Rudloff believes, that Roman Abramovich's actions, namely, selling Russian assets and buying foreign ones are negative implications to foreign investors. Moreover, Russian companies do not use financial instruments to attract investments. According to the head of the analytical department of the Standard & Poor's rating agency, Alexey Novikov, creditworthiness of the Russian government improves at a higher pace compared to that of Russian issuers. Russian sovereign debt obligations are currently rated ВВ+, and the average issuer rating in Russia is B. Russian banks are rated CCC+, which is the lowest rating of other Russian issuers. Russian regions are also rated below average. The Russian banking system is immature, which increases the risk of technical default. Banks are highly vulnerable to shocks on the stock market. Their profits decline and therefore consumer confidence worsens. And the most extraordinary sounded an announcement made by former Head of the Russian Central Bank Viktor Gerashchenko, who is now a State Duma deputy. According to him, Russia might default on its obligations in 2007. There are several reasons for defaulting. According to Gerashchenko's estimates, in 2005-07 revenue from selling oil will likely collapse and growth rates will decrease to 2.5-3.5 percent as well. According to the former Head of the Russian Central Bank, the financial markets are likely to be overheated if a debt problem emerges, therefore, a new default on the sovereign debt is possible. But participants of the conference were waiting for results of a meeting of the Economy Ministry and the Finance Ministry. Deputy Economy Minister Elena Danilova called VAT accounts inefficient and stressed the necessity of decreased the rate of the VAT.

Deputy Chairman of the Russian Central Bank Tatyana Paramonova commented on the major concern of shifting to IAS by Russian banks. She spent half day in Davos, as she was very busy in Moscow. All Russian banks will have to shift to IAS and this will not cost much, because it is not necessary to use complicated and costly programs, Paramonova emphasized. Shifting to IAS will help to assess the real situation in the whole banking sector and in each bank, she stressed. International accounting standards will help disclose information on real shareholders in Russian banks and help small banks to strengthen their market position.

Investments in Russia and peculiarities of the Russian market were largely discussed at the conference. Thus, participants were interested in announcements of future IPOs. Several companies have declared their intention to carry out an initial public offering, The Russky Textile company, SkyLink and Tinkoff have named the exact date of their IPOs. According to Tinkoff chairman Oleg Tinkov, the company plans to offer 35-40 percent of its authorized capital to Russian investors. The company has chosen the Russian market because the company lacks the revenue necessary to be admitted to a listing on western exchanges. The main problem for companies was how to carry out an IPO. Many companies plan to offer only a few investors about 5-7 percent of their authorized capital. After that they will not be afraid to offer a larger stake to investors. Buying stakes in AvtoVAZ and GAZ by the Templeton fund was mentioned. But according to the Vice President of the RBC Group, which has successfully carried out the first IPO in Russia, Alexander Morgulchik, "a company should offer investors at least a blocking stake or something close to it."

Several announcements were real sensations at the conference. Wimm Bill Dann shareholder David Yakobashvili declared that the company plans to buy technology for producing a drug, which stops the AIDS virus from replicating. The drug makes the virus in the infected cells latent. Using this drug a HIV-carrier will stop the development of the disease and prevent others from being infected. Yakobshivili is negotiating the possibility of buying the drug and all necessary licenses with a group of scientists who have discovered it. Usage of the drug and its production was approved by the Russian Health Ministry. But before any agreement Yakobshvili declined to disclose any details.