The share prices of Russian energy companies are several times lower than their real value. As a Rosbalt correspondent reports, this was announced yesterday by Alexander Baranov, vice-president of the investment group Russian Funds, who gave a report entitled Electricity on the verge of an investment boom.
Mr Baranov stressed that 'the potential growth of share prices in the electricity sector is higher than in other sectors.' He added that 'the share price of a number of Russian energy companies may rise dramatically within the near future and the industry is on the verge of an investment boom.'
Mr Baranov believes that the low share price of energy companies between 1998 and 2000 was mainly caused by the risks that were involved in the upcoming restructuring of the industry. Now these risks are significantly less and this has raised the interest of investors. 'However, this interest is still not reflected in the share prices,' Mr Baranov stressed.
He also emphasised that electricity, along with the oil and gas sector, is one of the leading industries in the Russian economy and accounts for about 10% of national GDP. He added that while share prices in the electricity sector and the oil and gas sector had risen concurrently before 1998, since 2000 share prices in the oil and gas sector have risen while share prices in the electricity sector have not. For this reason, Mr Baranov believes, this industry now has great growth potential. 'In terms of output and productive capacity the Russian electricity sector is the fourth largest in the world. It produces 6% of the world's electricity.' As Mr Baranov stressed, 'this means the industry has good long-term investment potential. Investment in the stock market alone may reach USD 20 billion by 2010.'