Russian billionaires are flocking to theSt. Petersburg Economic Forumthis week as they weigh the market fallout from President Vladimir Putin’s standoff with the U.S. and Europe overUkraine.

While ruble bonds are up for the first month in three, they’re losing money this year as capital flight topped $50 billion in the first quarter amid Putin’s annexation of Crimea and rising tensions with the U.S. and European Union. The White House is lobbying western business leaders to skip the forum, even as more Russian billionaires plan to attend than last year.

“This is bad,” Sergey Kolesnikov, the billionaire president and co-founder of Technonicol, Russia’s biggest producer of insulation and roofing materials, who is attending the May 22-24 conference, said by phone May 14. “Russia needs investors to enliven the economy, but money is flowing out.”

Russia’s dollar notes increased 0.7 percent since Putin’s Crimea incursion on March 1, the worst performer among 56 nations in the Bloomberg (BEMS) USD Emerging Market Sovereign Bond Index, which gained 4.8 percent in the period. Sergio Trigo Paz, who manages emerging-market debt at BlackRock Inc., said his funds sold all their Russian bond holdings last month because of the risk of escalating U.S. sanctions, the Financial Times reported last week. The press office of the world’s largest money manager declined to comment when contacted by Bloomberg yesterday.

Thirty-two Russian billionaires are scheduled to visit the forum -- two more than last year -- and big names from the U.S. are missing after White House officials called on the country’s top corporate leaders to pull out as the Ukraine crisis deepened.

Visa Inc.’s Charlie Scharf and PepsiCo Inc.’s Indra K. Nooyi are no longer participating. Citigroup Chief Executive OfficerMichael Corbat will send others in his place, the company said last month. Goldman Sachs Group Inc. CEO Lloyd C. Blankfein probably won’t attend, according to a person briefed on the matter, and Morgan Stanley CEO James Gorman is canceling his plans, another person said.

Alcoa Inc. CEO Klaus Kleinfeld won’t visit the forum and the company will “participate via its most senior Russian executives,” spokeswoman Monica Orbe said this month.

David Fuller's view

I suspect more Europeans will show up but I hope not.  The best way to deal with Putin’s aggression is via sanctions.  If a majority of the Russian oligarchs heading for the St. Petersburg Economic Forum concluded that Putin had become an expensive liability, the situation might change.