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    RUSSIA FACES DANGER OF SHARE MARKET "INVESTMENT OVERHEATING"?

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    MOSCOW, February 18, 2004. (RIA Novosti) -- Economic Development Minister German Gref believes that there is a danger for Russia of "investment overheating" above all on the share and real estate markets. He said this on Wednesday appearing before the National Economy Academy under the Russian government.

    "This may lead to a distortion in the financial sector and the economy in general," Gref said.

    He believes that "the main shortage on the market is the shortage of investment ideas. We are unable to stomach the inflow of investments," he continued.

    In this connection, Gref thinks it is necessary to downsize maximally the non-market sector of the economy. "Unprofitable enterprises should be taken through the bankruptcy procedure," he said.

    In his opinion, with the new "insolvency law" the bankruptcy procedure has become now "more efficient than before." The privatisation of state property is also conducive to the narrowing of the state sector of the economy. "The state's awkward actions are a curb for the vast market sector. Hence, the superfluous inefficient non-privatised property of the state, which tapers off the capability for creating a normal competitive market," Gref explained.

    Portfolio and direct investments in the Russian economy dramatically increased last year, Gref continued. "A record low ebbing of capital" was registered last year, which is an indication of "increasing attraction for domestic investors," he said.

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