Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) appeared less attractive to Russia’s biggest billionaire, who in place preferred Chinese internet retailer Alibaba. Usmanov, founder of Russia’s iron ore Metalloinvest holding company sold his stakes in U.S. tech firms Apple and Facebook and placed his money on Alibaba.com Limited (HKG:1688), a Chinese firm. The change in preference comes amid a time when the West is imposing political sanctions on Russia which are expected to move to businesses as well.
Apple, Facebook risky
Ivan Streshinskiy, head of Usmanov’s asset-management company USM Advisors LLC, told Bloomberg, “Chinese companies account for about 70% to 80% of the portfolio of our foreign internet investments.” Streshinskiy said that the billionaire acquired around $100 million worth of shares in Apple Inc. (NASDAQ:AAPL) last year, but now he has sold all of those. Also previously, the Russian tycoon sold around a 10% stake in Facebook Inc (NASDAQ:FB), which he acquired in 2009 when the social networking company was valued between $6 billion and $10 billion.
According to Bloomberg data, Alibaba is valued at $200 billion. For the latest quarter, the world’s second biggest Internet company after Google Inc (NASDAQ:GOOG) posted rising sales, marking profitability for the fourth straight quarter.
China a good hedge
Russia’s political relations with the West have been strained lately, owing to the Crimea referendum and the crisis in Ukraine. The shift in investment toward the Chinese online retailer would protect the investment in case Europe considers imposing sanctions on its exports.
Streshinskiy said they are concerned about potential actions against Russia, but “don’t see any dramatic repercussions for our business.” He added that there are few chances of China imposing any sanctions, so “we will be trading in rubles, yuan, Hong Kong or Singapore dollars.”
Yesterday the EU and the U.S. approved sanctions, including visa bans and asset freezes, against a few leading Russian officials, like residential aide Vladislav Surkov and presidential advisor Sergey Glazyev. So far, none of the Russian corporate world has come under any such attacks. Going by the size of bilateral trade, which stood at a record $87.5 billion in 2012, China is Russia’s biggest trading partner.
As on March 2014, Usmanov, 60, is expected to have a worth of around $18.6 billion.
