Salient to Investors:

Goldman Sachs has been hired by the Russian government to burnish the nation’s image overseas and attract more institutional investors. Sergei  Arsenyev at Goldman Sachs said valuations in Russia remain very attractive. Goldman Sachs has struggled to build a business in Russia.

Lloyd Blankfein at Goldman Sachs said the world’s premier financial centers have succeeded because of good rule of law – you can sue the UK government and have a reasonable chance that a court will decide that fairly.

Russia was ranked 112th in the World Bank’s Doing Business study in October 2012, better than emerging market competitors India and Brazil. Transparency Intl said in December that Russia remains the worst among major economies in graft.

Z/Yen Group says Moscow ranked 64th on the Global Financial Centers Index in September.

The Moscow Exchange’s valuations trail the biggest emerging markets, while Russian issuers prefer to sell equities in London.

Andrei Kostin at VTB Group said Russia was undervalued because of its image of corruption and lack of necessity to comply with law. Bloomberg data shows Micex Index companies have an average valuation of 5.9 times estimated earnings versus 16.6 for India’s BSE Sensex Index, 19.9 for Brazil’s Bovespa, and 13.4 for China’s Shanghai Composite Index.

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