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Asia Wins in Sanction War

By Danila Bochkarev

Published: August 28, 2014 (Issue # 1826)



  • Although Asian countries are unlikely to replace the EU in the short- and mid-term future, there are many signs that they will do so in the long term.
    Photo: Nicolas Lannuzel / Wikimedia Commons

Relatively affordable Western financing alongside London's role as Russia's de facto financial capital had been the two pillars of the Russian economic system.

But Western sanctions on long-term financing for Russia's state banks and some of its energy companies — such as Novatek and Rosneft — has increased the cost of capital and complicated project financing. Now London can no longer be considered to be a "safe haven" for Russian money.

It is possible, of course, that sanctions will be short-lived. However, the sanctions have already triggered tectonic shifts in Russia's financial mindset and served to immensely strengthen Russia's ties with Asia. In a strange twist, Beijing is emerging as a major winner in the current Ukraine crisis, while other Asian countries might benefit as well.

Consequently, although Asian countries are unlikely to replace the EU in the short- and mid-term future, there are many signs that they will do so in the long term. Russian wealth is already fleeing to the new "safe havens": Singapore, Hong Kong and Shanghai.

In 2012 the amount of assets under management in Singaporean banks reached $1.29 trillion, making Singapore an attractive alternative to the Swiss accounts that Russians have favored. A number of Russian companies — such as Gazprom and Rosneft — have already established a solid presence in Singapore, and their number is likely to grow.

And while Singapore is emerging as a "new Switzerland," Hong Kong is emerging as a new financial center for Russian companies. Hong Kong is particularly attractive because it combines the predictability of English law with a direct access to the Chinese economy.

In January 2010 the world's largest aluminum company, RusAl, became the first Russian company to organize an IPO on the Hong Kong Stock Exchange. Gazprom has also held talks about a Hong Kong listing and may use the yuan to finance its operations in Asia. In May 2014, Russian state bank VTB conducted its first transition in yuan.

Hong Kong currency's reputation for stability also attracts foreign businesses. On July 31, Russia's leading nickel producer Norilsk Nickel announced the company's decision to transfer a sizable amount of its liquidity into Hong Kong dollars. Russian mobile operator MegaFon has already transferred 40 percent of its liquidity into HK dollars.

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ALL ABOUT TOWN

Friday, Dec. 19


Test your mastery of parlor games during Game Evening at the British Book Center. Learn how to play a variety of classic, mentally challenging games and use your newly acquired skills to crush weaker opponents. The event beings at 5 p.m.



Saturday, Dec. 20


The city’s Babushkina Park on Prospekt Obukhovskoy Oborony will be invaded by dozens of rocking-and-rolling Santa Clauses during today’s Santa Claus Parade. Not only will they parade through the park but there will also be competitions amongst the festively-clad participants and a musical master class. There will also be a prize for the best-dressed Santa Claus.


Stock up your record collection during the Vinyl Christmas Sale at the KL10TCH bar on Konyushennaya ploschad today. Spend the afternoon perusing the records for sale while listening the classic, clean sound of records spinning out hits from a variety of musical genres and time periods.



Sunday, Dec. 21


The Zenit St. Petersburg basketball team returns to the northern capital this evening for a matchup with Krasny Oktyabr, a Volgograd-based basketball club. Tickets for the game, which tips off at 6 p.m. this evening, can be purchased on the club’s website or at their arena, Sibur Arena, on Krestovsky island.


Satisfy your sugar cravings during Sweet New Year, an ongoing seasonal festival at the Raduga shopping center. Each weekend of December will welcome hungry visitors to taste hundreds of different kinds of desserts made from a plethora of sweet treats. Workshops are open to visitors and seasonal gifts can also be purchased for those rushing to finish their New Year shopping.



Monday, Dec. 22


Pick out the latest fashions as holiday gifts for loved ones or as early presents for yourself during the Christmas Design Sale at Kraft on Obvodny Kanal, starting on Dec. 20 and continuing through Dec. 27. Designer clothes will be on sale every day of the week or you can buy something more festive to decorate the home while sipping on hot coffee and perusing the various master classes.



Tuesday, Dec. 23


Meet Arctic explorers Fedor Konukhov and Viktor Simonov during SPIBA’s and Capital Legal Service’s event “Arctic Expedition” this morning in the Mertens House business center at 21 Nevsky Prospekt. The meeting will discuss the explorers’ ongoing eco-social project and how companies can use the project as a unique marketing opportunity. Email office@spiba.ru by Dec. 22 if you wish to attend.



Wednesday, Dec. 24


The Anglican Church of St. Petersburg we will be holding a Christmas Eve service at 7 p.m. led by Rev Wm. Shepley Curtis of the Episcopal Church. The service will be held at the Swedish Church at 1/3 Malaya Konyushennaya Ulitsa.



To have your event included in All About Town, email tot@sptimes.ru



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