German bank offers trading in Russian equity
26 July 2004, FRANKFURT - Despite risks faced by investors in Russia in the short term, Dresdner Kleinwort Wasserstein (DrKW), the investment bank of Dresdner Bank AG, will offer trading in Russian blue chip stocks and other equity products next month.
26 July 2004
FRANKFURT - Despite risks faced by investors in Russia in the short term, Dresdner Kleinwort Wasserstein (DrKW), the investment bank of Dresdner Bank AG, will offer trading in Russian blue chip stocks and other equity products next month.
"We take the view that while there's been a lot of volatility in the past few months, and short-term there's still risk in the Russian equity market, medium and long-term we see considerable potential there," Carsten Stork, DrKW's Managing Director of Equity Trading for Germany and Austria, told Deutsche Presse-Agentur in a phone interview.
He said he was aware that a large investment bank Credit Swiss First Boston (CSFB) lowered its investment recommendation on Russian stocks over the weekend to "underweight" from "market weight."
"We're looking at the business medium and long-term," Stork countered.
The bank has just hired five experienced traders to handle the expected demand, bringing to nine the overall number of people employed by the unit in Moscow, Frankfurt and London.
Stork is clearly expecting such demand to materialize soon. "We're planning to break even by the end of this year," he said.
Initially, DrKW will be offering Russian blue-chip stocks that are traded on the Moscow Stock Exchange (MICEX) only to institutional clients registered in Russia because the current national law bans non-residents from owning Russian equities.
New legislation discussed by the Parliament aims to lift this ban, but "it's unlikely to pass this year," said the banker.
In addition, DrKW is offering institutional investors such equity instruments as American Depositary Receipts (ADRs) on Russian shares.
These instruments are trading actively on stock exchanges in London and Frankfurt.
And next year, the bank plans to offer trading in various stocks of major companies in EU accession countries.
It is currently targeting mutual, pension and hedge funds as key potential customers.
Short-term volatility doesn't faze the DrKW bankers who are also planning to offer trading in Russian equity derivatives as early as September.
Fluctuating security prices carry a higher risk premium and represent a lucrative opportunity for those who trade in derivatives.
Subject: German news