Red in tooth and claw

Market conditions were largely favourable through the year, so the decision was taken to snap up three properties in St Petersburg and Logopark Sever, a warehouse complex north of Moscow, for a combined consideration of RUR11.99 billion (£150m). Management also felt able to increase the final dividend payout by 50 per cent, and Raven exited 2017 with a cash balance of $267m ($199m). However, a step-up in borrowings and convertible preference share issues pushed net debt as a proportion of shareholders’ funds to 160 per cent, although the group counts head lease obligations and preference shares as capital when calculating its gearing ratio. But when you operate out of Mother Russia, accounting treatment is probably the least of your worries.

Unfortunately, Raven Russia happened to update the market on the same day that the UK government pointed the finger at the Kremlin for the nerve agent attack in Salisbury that left former Russian spy Sergei Skripal and his daughter critically ill, and a police officer in a serious condition. Maria Zakharova, a spokeswoman for the Russian foreign minister, described Theresa May’s statement to the Commons as a “circus show in the British parliament”. But the Russians have got a bit of form in this regard; a public inquiry into the 2006 killing of former Russian spy Alexander Litvinenko concluded that President Putin probably approved his assassination, while older readers may recall the untimely demise of the Bulgarian dissident, Georgi Markov, who was poisoned by a specially adapted umbrella on Waterloo Bridge in September 1979.

The point is, unless Moscow makes some suitably contrite noises on this one, or points to some rogue operative, there is every chance that we’ll see a widening of the sanctions regime. Any way you look at it, that’s bad news for the 40 or so stocks trading on the London Stock Exchange that are either domiciled, or whose business interests are centred primarily in Russia or one of the Commonwealth of Independent States that previously formed part of the Soviet Union. The possibility exists that future sanctions could extend to Russia’s debt markets, which would represent more than just a symbolic restriction given that international investors increased their share of Russian domestic treasury bonds to an all-time high of 31 per cent in 2017.

And it would come at a time when the outlook on Russian stocks is growing more favourable, a point borne out by the resurgence of IPO activity in 2017, driven by a rally in crude oil that’s reinvigorated the economy. Last year, Russian companies generated $2.8bn from listings in Moscow and London, the highest total in six years.

The MSCI Russia index value increased by a quarter over the past 12-months, a reflection of improving commodity prices with just over half of the index weighting attributable to large caps operating in the extractive or energy industries. You could argue that it’s an overly concentrated index, hardly reflective of the broader Russian economy, so the flat performance of the dollar-denominated RTS index probably provides a clearer indication of the level of risk appetite – but sometimes simply standing still represents progress (of sorts).