The most attractive regions and industries from the point of view of companies’ solvency

Information agency Credinform is introducing the attractiveness rating of regions and economic industries from the point of view of companies’ solvency.

The regions with the greatest number of companies which have the highest solvency index GLOBAS-i , are Rostov Region (810 companies), Sverdlovsk Region (526) и Novosibirsk Regions (493). There are no companies in Republic of Ingushetia, satisfying the requirements for the assignment of highest index. There are only two most solvent companies in the Chechen Republic and the same in the Trans-Baikal Territory Agin-Buryat district.
The largest amount of most solvent companies is at Rostov Region, where the highest GLOBAS-i index is appropriated to 0,67% of active subjects from the total amount of enterprises in the region. It is slightly less of such companies in Stavropol region - 0,52% and in Sakhalin Region - 0,42%. In Saint-Petersburg there is only 0,16% of companies with the highest solvency index, in Moscow a little more – 0,18%. Such situation can be explained by widespread activity of fly-by-night companies in large cities. Besides, these regions have traditionally maximum number of inactive enterprises.

Taking into account the solvency index and data about share of enterprises in the regions with high, satisfactory and low solvency level, the attractiveness rating of regions was compiled by Credinform experts. As assessment factor were taken groups of the solvency index GLOBAS-I and total revenue of enterprises by each group in region.

Quite expectedly the first places of the rating take Moscow, Moscow Region and Saint-Petersburg. Despite the low percentage of companies with the highest solvency index, these regions have rather high proceeds of sales on each group of solvency levels. That’s why these regions take first place.

Table 1. Rating of regions by solvency of the companies
taking into account revenue and net profit
Rating of regions taking into account revenueRating of regions taking into account net profit
Place Region Place Region
1 Moscow 1 Tyumen Region
2 Moscow Region 2 Belgorod Region
3 Saint-Petersburg 3 Krasnoyarsk Territory
4 Novgorod region 4 Kemerovo region
5 Khanty-Mansi Autonomous Area 5 Saint-Petersburg
6 Krasnodar region 6 Komi Republic
7 Rostov region 7 Samara region
8 The Republic of Bashkortostan 8 Vologda Region
9 Sverdlovsk region 9 Irkutsk Region
10 Samara region 10 Orenburg Region
11 Novosibirsk region 11 Nizhny Novgorod Region
12 The Republic of Tatarstan (Tatarstan) 12 the Yamal-Nenets Autonomous Area
13 Chelyabinsk region 13 The Republic of Bashkortostan
14 Krasnoyarsk Territory 14 the Republic of Sakha (Yakutia)
15 Kemerovo region 15 Tver Region

1The solvency index of Globas-i® - independent assessment of creditworthiness and financial stability of legal entity, which was created by Credinform according to worldwide standards and considering specifics of Russian economy. Index value can be various: from 100 – the highest solvency level, to 600 – the highest credit risk or unsatisfactory solvency index.

However, if we replace the assessment factor on net profit, the distribution of regions will change drastically. In the rating of regions taking into account net profit the first three places take Tyumen, Belgorod Regions and Krasnoyarsk Territory. Saint-Petersburg is on the fifth place, Moscow - the last, with the maximum net loss. This fact can be explained by the existence in this region of many large companies, which losses, as a rule, are also high enough. The fact that Saint-Petersburg is in TOP-ratings, which are made of various factors, speaks about its high investment attractiveness and good business conditions. 

By similar technique Credinform experts defined leading industries taking into account revenue and net profit.

Table 2. TOP-5 of industries by solvency of the companies
taking into account revenue and net profit
Leader-industry by solvency of the companies
taking into account revenue
Leader-industry by solvency of the companies
taking into account net profit
Place Industry Place Industry
1 Wholesale and retail trade; repair of motor vehicles, motorcycles, household goods and goods for personal use  1 Production of fuel and energy minerals
2 Financial activity 2 Wholesale and retail trade; repair of motor vehicles, motorcycles, household goods and goods for personal use
3 Operations with real estate, rent and services 3 Production of coke, oil products and nuclear materials
4 Construction 4 Chemical production
5 Production of fuel and energy minerals 5 Mining and quarrying, except fuel and energy minerals

Wholesale and retail trade companies are the most competitive and attractive for investment, as taking into account revenue and net profit.

Information about current financial situation of the company you can get from daily updated database Globas-i®. Analytical reports on research of Russian economy industries and regions can be obtained by contacting our dedicated Customer Service Department. 

Inflation dynamics in Russia

According to the data of the Central Bank the inflation rate comprised 6,5% at an annual terms in July 2013. As a result indicator value has decreased, comparing with the mark of 7,4% in May 2013. At the same time inflation speed comprised 0,8%, that is a record point for a present year.

First of all, disinflation in July took place due to price lowering of fruits and vegetables associated with prices for food products. While the rate rise occurred entirely due to the price increase for commercial services and utility rates (public utilities rates, Russian Railways).

Furthermore, the core inflation point at an annual terms has also decreased to 5,6% (5,8% in July 2013). Considering that core inflation reflects the part of inflation that directly depends on monetary policy and exchange rate policy, it’s possible to conclude that monetary factor pressure on the inflation rates is insignificant.

At the same time many analysts, taking into account the up-to-date consumer price behavior data, were waiting for slowdown in reference rates of the Central Bank that could promote the economical growth, which has significantly shifted to lower gear. Yet on the meeting on August, 9th the Central Bank didn’t change its rates, having emphasized the goal of saving the inflation decline tendencies and attaining target value. It bears reminding that target range for inflation on 2013 amounts to 5-6%.

According to opinion of many experts, in the second half of 2013 the inflation mark will return to target value. Thus, as per MEDT of Russia, the inflation rate in August will decrease to 6,4% at an annual terms. Moreover, the experts note that there are contributing factors that are necessary for inflation rate decline tendency: current focus monetary policy and lack of negative food market shock.

In addition, it’s necessary to nail down positive trend in order to attain target values in dynamics of inflation expectations. Thus according to results of research conducted by the Public Opinion Foundation under request of the Bank of Russia inflation expectations of population in May-June 2013 continue to decline. As per research under previous estimates of economical situation and significant improvement of current situation analysis, the consumer sentiment index (CSI) has reached absolutely neutral level in May-June 2013. Consequently, it can be concluded that improvement of economical situation analysis and forecasts of inflation, begun in March, endures. Experts predict a further decline of inflation expectations.

At the same time the Central Bank’s Governor Elvira Nabiulina as early as July 2013 said that she didn’t see reasons for delay of inflation targeting that was planned on 2015.

Inflation targeting is understood to be monetary policy, which is focused on inflation rate control, whereby objective value is taken shape and becomes a goal to achieve.

Inflation targeting has approved itself in many countries, but under current situation this implement can become effective only together with rates control, that influence on inflation both directly and indirectly (product cost increases due to growth of rates, as a consequence prices increase, too). Thus in June 2013 at the international economical forum the President offered to limit rate increase by planned inflation rate. With a help of this combination of approaches to solve such a vexed problem, it’s possible to count upon successful result.