Most investors (58 per cent) are optimistic about the investment opportunities in Russia over the next three years, based primarily on strong commodity prices, especially oil, new findings from a JP Morgan survey show.

“Many investors believe that strong demand for natural resources will bolster the rest of the economy and spur both consumer and infrastructure spending,” JP Morgan said.

Other attractive factors include strong economic growth, with an “abundance of natural resources”, low debt and healthy employment rates, according to the Investor Opinions of Russian Companies survey. 

However, North American and European investors believe Russian companies must strengthen their corporate governance standards and improve investor communications in order to attract and retain foreign investment.

While the country is attractive from a macroeconomic perspective, government intervention, opaque corporate governance practices and lack of regulation to protect investors were also cited as risks.

Investors agree that the “best ways” for Russian companies to improve their relations efforts are to “equip investor relations officers with senior-level insight”, as well as adopting the financial reporting and disclosure practices of more developed markets' companies. Moreover, firms should increase the “accessibility and visibility” of senior management, while establishing “consistent communication” with the investment community.

In terms of improving corporate governance standards, respondents said firms should focus on aligning interests with minority shareholders by promoting independent board structures, defining shareholder structures and being “good stewards of capital”.

Another significant finding is that half of the survey participants believe US or UK listings increases the appeal of a Russian company.

Furthermore, an overwhelming 80 per cent of those surveyed do not assign different risks to those Russian companies which are incorporated offshore. "Investors said they evaluate companies on a case-by-case basis and cannot make generalisations based on where a company is incorporated," JP Morgan said. 

The survey was conducted in March by JP Morgan's depositary receipts business. It involved 40 firms investing in Russia, managing an aggregate $700 billion in equity assets, as at 31 December.