Russia presents significant investment opportunities for the medium to long-term as its high commodity reserves are likely to play a key role in China’s bid to become a leading global economic power, according to Matthias Siller, fund manager of Baring Emerging Europe Plc at Baring Asset Management.

As they attempt to tackle the economic slowdown governments around the world have launched massive economic stimulus packages - with China being at the forefront of such moves. A large proportion of these stimulus packages are allocated to infrastructure spending, and this is particularly the case in China, notes Mr Siller.

China’s industrialisation and urbanisation will require a mammoth supply of raw materials, and while Russia’s oil and gas reserves are well known, Mr Siller points out that the country also has massive reserves in other key commodities.

“Oil and gas aside, it is little known that Russia has approximately 40 per cent of the global reserves of palladium, 28 per cent of titanium, 17 per cent of nickel and 8 per cent of iron ore,” he said (approximate figures, as at 10 January 2008).

Russia is currently the best performing equity market, with the MSCI Russia 10-40 Index rising by 38.9 per cent compared to 14.4 per cent for the MSCI Emerging Europe 10-40 Index, Mr Siller said.  Such is the firm’s confidence in the country that just over half (56.4 per cent) of Baring Emerging Europe is invested in Russian securities, he said.

Finally, Mr Siller also highlights the fact that Russia is one of the world’s major suppliers of soft commodities, such as wheat and grain, and this is a further source of investment potential as the global population expands and demand outstrips supply.