Prime Minister Vladimir Putin is likely to return as Russia’s President after next year’s elections, spurring gains in the ruble, according to analysts at Citigroup Inc.
“The consensus view is that Putin will return as the President, based on our discussions with local political analysts as well as market participants,” Elina Ribakova and Natalia Novikova, analysts at Citigroup, wrote in a report dated yesterday.
While Putin is perceived as “less friendly towards the West,” differences with the current president Dmitry Medvedev are “minor” and have been priced in by currency traders, according to the report. “Mild appreciation pressure on the ruble” is expected over the coming months, the analysts wrote.
Election uncertainty spurred a net $21.3 billion of capital outflows from Russia in the first quarter of this year and an estimated $9.9 billion in the second quarter, according to the central bank. At least five companies have abandoned initial public offerings this year, including OAO Russian Helicopters and OAO Siberian Coal Energy Co. in May.
Market consensus is emerging that “political uncertainty” is less of a threat to capital than it was earlier in the year, said the analysts. Finance Minister Alexei Kudrin is “the key to macro stability,” they wrote.
Neither Medvedev nor Putin has ruled out running for president in 2012. Putin, who served as president from 2000 to 2008, can return to the Kremlin without violating the constitutional ban on three consecutive terms.
The ruble closed unchanged against the dollar at 27.80 as of 7 p.m. in Moscow.
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