Financier Andrei Movchan bucks the trend by standing up to Vladimir Putin
Moscow — Prominent financiers in Russia typically avoid criticising President Vladimir Putin’s economic policies. Andrei Movchan is building a business out of it.
“The thrust of my clients is partly politically charged,” said Movchan, CEO of the fast-growing Movchan’s Group, which manages more than $100m for wealthy Russians. “My clients are people who read and watch me, which means that they want to diversify from Russia.”
Movchan, 51, is well known within Moscow financial circles. He was executive director of Troika Dialog, once Russia’s largest investment bank, and board chair of Renaissance Investment Management, which oversaw $7bn. He formed Movchan’s Group in 2016 and now advises more than 100 individuals, many of them from Russia. He also has 65,000 followers on Facebook, a platform that gives him a microphone to slam Putin and his policies.
In December 2019, he pointed to the outflow of people and businesses from the country, especially start-ups, while the state finances inefficient new businesses. In 2018, he was even more candid.
“Putin doesn’t have any policy … Russia is governed by completely rigid administrative system … There is no planning, no personal responsibility and only personal tasks,” Movchan wrote on Facebook.
The Russian economy has nearly doubled since Putin took power in 2000, according to Bloomberg Economics estimates. But living standards aren’t meeting expectations and sanctions imposed since the annexation of Crimea in 2014 have further stunted growth. It’s also one of the most unequal societies in the world, with 23 billionaires from the country tracked by Bloomberg worth more than $300bn.
The government is hoping 2020 will be better, fuelled by higher government spending and lower interest rates. The central bank has warned though that Russia won’t be able to significantly revive the economy without structural reform.
Movchan said he’s never received any pushback because of his harsh criticism, but others have not been so fortunate.
I don’t invest in Russian stocks not because you can’t make money there in some moment, but because you can’t make money there in the long runAndrei Movchan, CEO of Movchan’s Group
Russia’s biggest bank fired a veteran oil analyst in 2018 after he wrote a report claiming that two of Putin’s close friends were the main beneficiaries of state-run Gazprom’s $130bn investment plan.
Sergey Aleksashenko, former central bank deputy chair and former head of a Merrill Lynch unit in Moscow, was stripped of his roles on the boards of two state-controlled companies. He left for the US in 2013.
Movchan is sticking to his central argument about Russia even after the nation’s equity market in 2019 was the world’s best performer on a total-return basis in dollar terms. Its currency was the second-best worldwide.
“I don’t invest in Russian stocks not because you can’t make money there in some moment, but because you can’t make money there in the long run,” he said.
Movchan’s clients are typically businesspeople, including retired executives, and those who own franchises. They frequently want to diversify their holdings away from Russia’s economy amid concerns over growth.
“Franchisers have positive cash flow. They are very accurate people who want to invest conservatively,” said Movchan. His group offers two funds: one focuses on short-term liquid debt securities and another seeks risk-free arbitrage. The minimum investment sum is $250,000.
So far his clients are satisfied. Since he started the group four years ago, only $300,000 has been withdrawn while additions to the funds exceed $30m annually.