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MinFin prepares amendments to pension money investment rules

The Ministry of Finance has prepared amendments to the investment rules for Russian pension funds which, among others, lift the restrictions on pension money participating in IPOs, Interfax reported yesterday.

This is exactly along the lines of the proposals voiced at the major meeting on facilitating privatisations through the local exchanges, hosted by President Vladimir Putin on 31 January.

The government continues to make progress reforming the capital markets in order to ease and streamline the capital markets procedures (including those governing the IPO/SPO process). If pension money does indeed join the ranks of the buyers, the supply (including the enlarged privatisation pipeline) would become a less sizable drag on the supply/demand outlook for Russian equities, both for 2013 and beyond. However, watch out for the implementation of the most crucial recommendation on pension funds, i.e. the withdrawal of the ‘no annual loss’ provision. The draft proposals have yet to be confirmed by the agencies and considered by the government. 

Alexey Zabotkin, Sergey Galkin, Ilya Piterskiy
VTB Capital analyst

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