Taking part in the most expensive Olympics ever, either as an investor or a contractor, has turned out to be a turn-off for Russian stock pickers.
The CHART OF THE DAY shows shares in United Co. Rusal slumped 48 percent in the past 12 months as the biggest companies involved in President Vladimir Putin’s $51 billion plan for the Winter Games in Sochi underperformed Russia’s benchmark stocks gauge. OAO Mostotrest slid 30 percent, OAO GMK Norilsk Nickel fell 8.7 percent and OAO Gazprom dropped 6.2 percent on concern they will lose money on their Olympics contracts. The Micex Index fell just 2.3 percent in the period.
“I don’t see any value in it,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said from Moscow. “Everyone understands that from a business perspective such sponsorship doesn’t make any sense.”
Through their involvement in the project, initially forecast to cost $12 billion, companies are ensuring they will be eligible for “state support” when needed, Popov said.
Basic Element Co., the holding company of billionaire Oleg Deripaska that controls Rusal, oversees Sochi projects valued at $2.4 billion, including a $778 million Olympic athletes’ village. Bridge and road builder Mostotrest has the bulk of the $6.8 billion of Olympic contracts held by Putin’s judo partner Arkady Rotenberg.
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