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[loganair] 21/1/2016 08:33

Ruble collapses to all-time lows. The optimism we evidenced on the markets on Tuesday was short-lived as worries about China’s growth have not evaporated and the oil market is far from stable. Markets turned red across the board yesterday globally. Russian equities retreated to levels not seen since mid-December 2014, as Brent futures collapsed, pushing the ruble/dollar rate to an all-time low. Nevertheless, the Central Bank Chair Elvira Nabiullina in an interview yesterday said that the CBR will refrain from currency interventions as the current ruble rate is fundamentally fair.

[loganair] 21/1/2016 08:31

2015 dividend likely to stay at 2013-14 level. According to the chairman of Gazprom’s (JRS 2nd Largest Investment) BoD, Victor Zubkov, the company expects to export 160 bcm of pipeline gas to non-FSU countries in 2016, compared with 159 bcm in 2015. The average price for EU and Turkey is currently $180/kcm, according to Zubkov, down 37% YoY. Zubkov expects the 2015 dividend at the 2013-14 level in rubles, RUB7.2/share ($0.09), implying a 5.8% yield.

[firtashia] 17/1/2016 10:52

Interesting article here of how Russia finances the newly independent states of Donbabwe & Luganda.

[loganair] 16/1/2016 10:59

Since last year, even though in Rouble terms, dividends paid by Russian companies have increased, as the rouble exchange rate against sterling has dropped by around 10%, going from around 98 roubles to the pound to 110 roubles to the pound and therefore I am not expecting an increase in the dividend that JRS pays.

[togglebrush] 16/1/2016 06:05

FWIW
Results for Year ending 31st October were 27th January 2015 LAST YEAR
'
Div was 13p with EX 15 Feb Payday 11 March

[loganair] 15/1/2016 08:08

Oil production to keep growing but capex cuts are possible. According to energy minister Alexander Novak, Russian oil companies plan to further increase oil production in 2016. In 2015, Russian oil output grew by 1% YoY to 10.7 mln bpd. Novak does not expect a decline in crude exports either. He is not aware of any plans by oil producers to cut capex but cannot rule them out as some greenfield projects could be delayed.

[loganair] 13/1/2016 10:21

Oil price swings continue to drive the Russian equity market, which partially recovered intraday losses by the close yesterday. The RTS Index had been down more than 2% after the open as oil prices bounced intraday: Brent was trading above $32/bbl but failed to consolidate that position and slid to 30.3/bbl in the evening while WTI fell below $30/bbl last night. Retail names (Magnit, Dixy and M.Video) were among the worst performers after Magnit reported weaker than expected sales for December on Monday, reflecting the weakening purchasing power of Russian consumers. The RTS Index closed 0.5% lower as a result. However, the crude price slid to $31/bbl by the Russian market close and later Brent futures tested levels close to $30/ bbl. In addition, base metal prices continued to soften.

[loganair] 11/1/2016 12:23

Inflation reached 12.9% in 2015. According to preliminary Rosstat estimate consumer prices grew 0.8% MoM in December (the same as reported in November). Thus, inflation grew 12.9% YoY in 2015 versus 11.4% YoY growth in 2014. The 2015 growth figure was above the markets (12.7% YoY) and official (12.5% YoY) forecasts. The market notes that CPI decelerated substantially in December compared to November, when prices grew 15% YoY.

[leonasdad] 28/12/2015 09:33

bit greedy this morning

[loganair] 28/12/2015 09:30

Moscow Times - Can Russia's Economy Recover in 2016?

What about next year? Many observers consider that the economic situation will continue to unravel.

There has been considerable hand-wringing about Russian economic prospects. This is no surprise as the oil price this week hovers around its lowest point in 11 years, or just over $34 per barrel. No doubt the prices of Russian assets reflect a significant risk premium to compensate for a potential crisis situation on the back of further drop in oil prices, geo-political confrontations, on-going sanctions (and the associated limited access to markets, banking sector stress, and corporate default concerns), and deeper economic stress — since all of these risks are biased to the downside in the near term. And, in the longer term, there are of course additional concerns such as the rule of law, the protection of property rights and the general legal framework, which are clearly not among Russia's competitive advantages.

This may be too pessimistic. Modest growth should resume in 2016. However, the recovery is likely to be modest as the limiting factors behind decelerating potential growth will take time to be addressed, leading to medium-term growth of 1-2 percent per year.

Unfortunately, despite all the talk about economic diversification, the years of high oil prices discouraged the galvanization of political will to pursue tough structural reforms to improve the investment climate. A long period of oil prices below $ 40 per barrel might just be the trigger to induce piece-meal structural changes as foreshadowed in President Putin's annual address to the Federal Assembly earlier this month.

It could also be that the pervasive sense of pessimism has been overdone. When we start back to work after the New Year's holidays, we should not be too surprised by the headlines reporting the welcome drop in inflation back into single digits (largely because of base effects, but real nevertheless). And barring a geo-political disruption, the CBR will be able to proceed rapidly to cut its benchmark discount rate starting in the first quarter of 2016.

That said, medium-term prospects remain highly uncertain. The external environment is not benign: there are just too many accidents waiting to happen in economic and financial terms, whether in the Eurozone, the Middle East, China, or Japan. And more fundamentally, if Russian policy-makers cannot summon the political will to promote a thriving private sector, then productive investment as the critical driver of long term sustainable growth will not materialize.

[loganair] 26/12/2015 09:59

30th November 2015 - Portfolio analysis by JP Morgan:

The trust's net asset value outperformed the benchmark, while the share price performed in line. Stock selection was strong in the consumer staples sector, led by our investment in Ros Agro, one of the largest vertically-integrated agriculture holding companies in Russia. The company announced its best nine-month financials in its history, helped by strength in its sugar business. Stock selection was weakest in energy, where we are underweight. Our overweight exposure to Surgutneftegas and underweight to Lukoil detracted from returns. Lukoil performed well, despite a weakening oil price, as expectations for third-quarter earnings were better than expected, largely due to positive channel checks in the company's downstream segment. We continued to hold an overweight to information technology names, and these contributed positively, as did our lack of exposure to utilities.

[loganair] 24/12/2015 09:51

What awaits Russia’s economy in 2016 – collapse or recovery?

Analysts have reacted to the latest collapse of oil prices with varying forecasts. Some believe oil prices are on their way down to the critical level of $35, which would keep the Russian economy in recession. Others, however, including Western analysts, are of the opinion that 2016 may see the first shoots of recovery.

The collapse of oil prices in December has divided officials and analysts into pessimists and optimists, with Russian Finance Minister Anton Siluanov predicting on Dec. 12 that the price of oil in 2016 will fall below $30 per barrel in some periods, according to the TASS news agency.

According to Siluanov, demand and the price of oil will continue to decline over the next year and Russia needs to start preparing for the worst.

“We need to draw up backup plans now – on what would happen if the prices will fall further,” said Siluanov, recalling that the 2016 budget is based on a price of $50 per barrel, while the macroeconomic situation is currently showing no signs of changing for the better.

An oil price of below $40 is considered a risk scenario in the government’s macroeconomic development plan for 2016. In this case, the economy will lose another 2-3 percent, the investment slowdown will continue, and inflation will fall to 7 percent by the end of 2016. According to Central Bank head Elvira Nabiullina, “the relevance of this scenario has recently increased.”

Russia, for which 50 percent of its budget revenues are dependent on oil and gas returns. In the next year, the budget deficit should not exceed 3 percent.

However, according to a review by Bank of America-Merrill Lynch, if oil prices were to fall to $35 a barrel, however, then in order for Russia to fulfil its 2016 budget with a maximum deficit of 3 percent, the dollar would have to cost about 94 rubles (in relation to the ruble-dollar exchange rate in mid-December, this means the ruble would drop by another 34 percent – RBTH).

Even at $50 per barrel in 2016, the economy will continue to decline by another 0.5-1 percent, according to Central Bank forecasts. In this scenario, the regulator expects the recovery of real income and consumption no earlier than
in 2018. The International Monetary Fund and the World Bank have made similar forecasts – a continued economic downturn at the price of $50-53 per barrel.

Cautious optimism:

However, the assessment by the Russian Ministry of Economic Development is more optimistic. According to the ministry's head Alexei Ulyukayev, the period of volatility in oil prices is about two-three quarters.

“Somewhere in the middle of 2016, a new balance is highly likely to be found, a balance between supply and demand on the oil market,” he said.

The Ministry of Economic Development, meanwhile, is still expecting an oil price of $50 a barrel in 2016. Accordingly, the ministry predicts a “recovery̶1; in GDP growth, based on figures for the last quarter of 2015: In September-November, GDP showed a tiny return to growth, rising by 0.1-0.2 percent.

Western analysts also express cautious optimism that Russia may return to growth in 2016. Bloomberg consensus estimates for 2016 are $55.5 per barrel, with only five out of 27 analysts expecting the average annual price below $50.

Meanwhile, international rating agencies also do not see the risk of a new collapse of the Russian economy: Fitch and S&P anticipate a GDP growth in the range of 0.5 to 0.3 percent.

[loganair] 24/12/2015 09:50

The Russian equity markets rallied yesterday as oil continued to soar. The RTS index finished the day 3% higher, with Sberbank prefs (+4.4%), Novatek (+3.7%) and Transneft prefs (+3.2%) leading the gains. The oil price surged almost 4% yesterday even though OPEC's annual world outlook projected a further drop in global demand. The ruble also advanced, strengthening past RUB70/$, providing Russian investors with at least some degree of optimism. Today President Putin will hold his traditional annual meeting with influential Russian businessmen.

[loganair] 24/12/2015 09:49

About 10 bcm exported from 1-20 December. According to a company statement, Gazprom’s (JRS 2nd Largest Investment) natural gas exports to countries outside the former Soviet Union (FSU) from 1-20 December increased 32% YoY to 9.87 bcm, or about 6% of the company’s planned exports for FY2015.

[loganair] 23/12/2015 09:35

Danske Bank - our best recommendation for 2016 at this stage is to treat emerging markets highly selectively. We recommend looking for energy-importing emerging markets with large export shares to the US and which have seen a large FX adjustment, such as Asian, some Latin American and Eastern European countries. India is certainly a country that meets the criteria but Mexico and Turkey also look promising. Although we believe commodity producing countries will be under a lot of pressure, we may see a turning point in some of the countries that have allowed large upfront exchange rate adjustments, such as Russia.”

[loganair] 23/12/2015 09:31

No positive drivers for the Russian market. Russian stocks were swinging up and down yesterday, following moves in oil and the ruble. In the end, the RTS index closed 0.9% lower. The EU officially prolonged its sanctions against Russia through the end of July, as the peace agreement in Eastern Ukraine has not been fully realized. The decision was expected and is therefore unlikely have a material impact on the market. Meanwhile, oil prices continued to weaken yesterday, with Brent futures moving closer to the $36/bbl mark and reaching the lowest level in 11 years as the market weighed the risks of an oversupplied oil market. In the absence of positive drivers, it looks like we will not see a Christmas rally in the Russian market in the last week of active trading. In the current situation, the only clear investment idea is dividend stories.

[loganair] 21/12/2015 17:30

The economy shows initial signs of stabilization. Following the sharp decline in 1H15, the market saw the first signs of economic stabilization in 2H15 as real GDP dynamics improved modestly YoY in 3Q15. In 2016, the market expects inventories and net exports to contribute to growth, although private consumption is still going to suppress the economy as real wages and pensions will remain in negative territory. As a result, the market forecasts the economy to contract a modest 0.6% in 2016 and to return to growth in 2017.

[loganair] 20/12/2015 11:02

What awaits Russia’s economy in 2016 – collapse or recovery?

Analysts have reacted to the latest collapse of oil prices with varying forecasts. Some believe oil prices are on their way down to the critical level of $35, which would keep the Russian economy in recession. Others, however, including Western analysts, are of the opinion that 2016 may see the first shoots of recovery.

The collapse of oil prices in December has divided officials and analysts into pessimists and optimists, with Russian Finance Minister Anton Siluanov predicting on Dec. 12 that the price of oil in 2016 will fall below $30 per barrel in some periods, according to the TASS news agency.

According to Siluanov, demand and the price of oil will continue to decline over the next year and Russia needs to start preparing for the worst.

“We need to draw up backup plans now – on what would happen if the prices will fall further,” said Siluanov, recalling that the 2016 budget is based on a price of $50 per barrel, while the macroeconomic situation is currently showing no signs of changing for the better.

An oil price of below $40 is considered a risk scenario in the government’s macroeconomic development plan for 2016. In this case, the economy will lose another 2-3 percent, the investment slowdown will continue, and inflation will fall to 7 percent by the end of 2016. According to Central Bank head Elvira Nabiullina, “the relevance of this scenario has recently increased.”

Russia, for which 50 percent of its budget revenues are dependent on oil and gas returns. In the next year, the budget deficit should not exceed 3 percent.

However, according to a review by Bank of America-Merrill Lynch, if oil prices were to fall to $35 a barrel, however, then in order for Russia to fulfil its 2016 budget with a maximum deficit of 3 percent, the dollar would have to cost about 94 rubles (in relation to the ruble-dollar exchange rate in mid-December, this means the ruble would drop by another 34 percent – RBTH).

Even at $50 per barrel in 2016, the economy will continue to decline by another 0.5-1 percent, according to Central Bank forecasts. In this scenario, the regulator expects the recovery of real income and consumption no earlier than
in 2018. The International Monetary Fund and the World Bank have made similar forecasts – a continued economic downturn at the price of $50-53 per barrel.

Cautious optimism:

However, the assessment by the Russian Ministry of Economic Development is more optimistic. According to the ministry's head Alexei Ulyukayev, the period of volatility in oil prices is about two-three quarters.

“Somewhere in the middle of 2016, a new balance is highly likely to be found, a balance between supply and demand on the oil market,” he said.

The Ministry of Economic Development, meanwhile, is still expecting an oil price of $50 a barrel in 2016. Accordingly, the ministry predicts a “recovery̶1; in GDP growth, based on figures for the last quarter of 2015: In September-November, GDP showed a tiny return to growth, rising by 0.1-0.2 percent.

Western analysts also express cautious optimism that Russia may return to growth in 2016. Bloomberg consensus estimates for 2016 are $55.5 per barrel, with only five out of 27 analysts expecting the average annual price below $50.

Meanwhile, international rating agencies also do not see the risk of a new collapse of the Russian economy: Fitch and S&P anticipate a GDP growth in the range of 0.5 to 0.3 percent.

[loganair] 17/12/2015 09:59

Most indicators improved slightly in October. Data published by Rosstat showed that most key economic indicators continued to improve in October. Industrial production improved to a contraction of 3.6% YoY from a 3.7% YoY decline in September due to the extraction segment, while cargo turnover growth accelerated to 4.3% YoY from 0.8% YoY in September. The construction sector shrank 7.9% YoY after contracting 9.1% YoY in September, while growth in agriculture accelerated to 7.7% YoY from 4% YoY in September. However, consumer demand continued to deteriorate, as retail trade dropped 11.7% YoY in October after falling 10.4% YoY in September. Real disposable incomes shrank 5.6% YoY versus 4% YoY in September, and real wages dropped 10.9% YoY versus 10.4% YoY in September.

[loganair] 15/12/2015 09:14

Oil continues to dampen the mood in Russia. The Russian market continued its strong downward move yesterday, driven by the falling oil price, with the RTS index losing another 2.1%. Brent futures fell as low as $36.40/bbl intraday as investors continued to weigh the risks that the oil market will remain oversupplied in light of OPEC's decision to focus on market share rather than prices and Iran's plans to boost oil exports. The ruble fell below RUB71/$ during the session. Although Brent futures closed at $37.92/bbl after paring losses, they are sliding again this morning.