Russian investors voting with their feet

As reported yesterday in the Moscow Times, capital outflow from Russia has reached approximately $49.3 billion so far in 2011, and the Central Bank estimates that and additional $18.7 billion will take flight in the next quarter.

Perhaps weary of election uncertainty prior to the announcement as to who would be running the country and then added fears over the return to a more authoritarian style government with the return of Vladimir Putin to Russia’s top post, investors appear to be voting with their feet in the understanding that election processes have little guarantee of a clean and fair election.

Former Finance Minister Alexei Kudrin, fired by President Medvedev in recent weeks, had said that capital flight was caused by “the high oil price and the impossibility of investing this revenue on the domestic market.” Not exactly a complimentary view of investing in domestic Russian stocks.

Statements from the Central Bank revealed that the 3rd quarter numbers had doubled from the 2nd quarter at the rate of $9.2 billion and Sergei Ignatyev, chairman of Russia’s Central Bank, said that the flood of capital pouring out of the country had swelled in more recent months.

Bloomberg Financial is forecasting that 2011 will be the year when Russia suffers the largest loss of capital since the world economic crisis began in 2008.

As for the Russian ruble, it has fallen against the dollar to levels not seen in more than 2 years.