Much is the hoopla in Moscow these days, as President Obama and his corporate entourage part the Iron Curtain to try and "reset" our relationship with Russia. Accompanying the Prez on this week's voyage are executives of some of the biggest U.S. corporations:
(NYSE:PEP)and Pepsi Bottling Group, which on Monday announced a billion-dollar expansion of their joint investment in the country.
(NYSE:BA), which aims to set up a joint venture with titanium titan VSMPO-Avisma to churn out metal for its aircraft.
(NYSE:DE), which will reportedly invest $500 million in production of agricultural machinery.
- And ConocoPhilips
(NYSE:COP), angling to get some investment moving the other way as it negotiates a (U.S.) East Coast refinery partnership with Russia's LUKOIL.
… not to mention ExxonMobil
I see a red door and I want to paint it black … gold
Trade delegations and their direct-investment talk make for good newspaper copy. But as far as profit goes, oil drives the Russian stock market -- and the Russian markets in general.
Witness Pepsi's arch-local-rival in Russia, Wimm-Bill-Dann
Oil's recent resurgence has sparked a revival in Wimm's stock price, and it could be that investors expect similarly great things for all the firms rush-ing to Russ-ia. But to my Foolish eye, it just confirms the point that all profits in Russia flow from a single wellspring. When that well's a gushin', riches may flow to Russia investors.
Or not. Ikea learned the hard way how tricky investing in Russia can be. Companies looking to do business there shouldn't overlook the risks -- economic or political.
Pepsi and Coca-Cola battle over Russia -- and the world: