Putin Dividend Push Flops

Most of Russia’s state-controlled companies have refused President Vladimir Putin’s appeal to raise dividends, providing a fresh reason for investors to avoid the cheapest emerging-market stocks. “The unrealized dividend promises have a negative impact on the market, especially since this was one of the key growth triggers,” Victor Bark, who oversees about $2.8 billion as the head of asset management at Alfa Capital in Moscow, said by phone on May 27. “This is bad news in a situation when there are no sources for economic growth.”

Putin has targeted dividends in a drive to boost budget revenue and lure foreign and domestic investors wary of an economy that grew at the slowest pace since 2009 in the first quarter. Capital outflows amounted to as much as $4 billion in April, according to the Economy Ministry. The government’s payout push hasn’t been effective so far as some of the biggest companies resist trimming their cash piles after profits slumped last year, according to Pacific Investment Management Co.’s Masha Gordon, who manages Pimco’s $581 million emerging-markets equities fund.

Source: Washington Post

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