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[loganair] 13/11/2014 08:45

Rouble sinks, but has the potential to recover, although risks growing - The rouble finally a freely floating currency. On Monday, the Central Bank completely abolished the currency corridor, leaving the rouble as a freely floating currency. Despite the nervous initial reaction in the currency market, we believe that after a relatively short period of volatility, the rouble will continue to be driven by fundamentals, including oil prices, capital flows, and geopolitics.

[loganair] 13/11/2014 08:44

Rouble sinks, but has the potential to recover, although risks growing - The rouble finally a freely floating currency. On Monday, the Central Bank completely abolished the currency corridor, leaving the rouble as a freely floating currency. Despite the nervous initial reaction in the currency market, we believe that after a relatively short period of volatility, the rouble will continue to be driven by fundamentals, including oil prices, capital flows, and geopolitics.

[traderabc] 11/11/2014 12:39

Hi loganair, do you know of any ETF that cover Russia? I'm looking for something in the Agricultural/ Energy/ Mining sectors, commodities really, any ideas?

Bit dated but might be of interest,

[loganair] 11/11/2014 09:03

Sales increase 36% YoY. Yesterday, Magnit (JRS Largest Investment) published a strong trading update for October. Revenue growth accelerated 1.7 ppt from 34.4% YoY in September to 36.1% YoY to RUB66.2 bln ($1.6 bln) in October. All segments grew rapidly, including convenience stores (up 33% YoY), hypermarkets (up 33% YoY compared to 27% in September), Magnit family (up 142% YoY) and Hardware (up 65% YoY).

[fabius1] 09/11/2014 18:11

log - Think you are right. I was stopped out. I was in at 375 sitting on support on the daily. Weekly was a touch and go but both now starting to look weak. Did you hear the Gorbachev comments on another 'Cold War'. BBC link here just in case you missed it.

[loganair] 08/11/2014 14:05

Moscow and Beijing have agreed many of the aspects of a second gas pipeline to China, the so-called western route. It’s in additional to the eastern route which has already broken ground after a $400 billion deal was clinched in May.

In May, China and Russia signed a $400 billion deal to construct the Power of Siberia pipeline, which will annually deliver 38 billion cubic meters (bcm) of gas to China. The Power of Siberia, the eastern route, will connect Russia’s Kovykta and Chaynda fields with China, where recoverable resources are estimated at about 3 trillion cubic meters.

The opening of the western route, the Altai, would link Western China and Russia and supply an additional 30 bcm of gas, nearly doubling the gas deal reached in May.

[loganair] 08/11/2014 14:02

Overall trade between Russia and China increased by 3.4 per cent in the first half of 2014, reaching $59.1 billion, and the two neighbours expect annual trade to reach $200 billion by 2020. China is Russia’s second-biggest trading partner after the EU.

[loganair] 08/11/2014 13:19

Letting the rouble float free is the Kremlin’s way of opening an umbrella. For one thing, it insulates Russia from the falling price of oil: it may have dropped in dollars, but in roubles it’s about where it was in January.



I can see JRS falling further next week and can easily see 300p on the cards over the next couple of weeks and even 250p in the short term, by years end.

The rouble crashing won’t change anything today or tomorrow, but this is just the system starting to eat itself, this is just the system starting to crack. Historically, economic crisis triggers political crisis in Russia. No one knows when one of those cracks brings the whole thing down, but there’s a growing sense in Moscow that it will happen sooner than we all think.

When this happens I can easily see JRS falling to 200p or may be even a little lower, then will be the time to pile in.

However over the long term, 10 to 15 years. I still remain very positive when it comes to Russia.

I'm happy to continue to drip feed in to JRS and enjoy the 4% yield on offer as many Russian companies remain very profitable, growing income and profits by 10% a year.

[loganair] 08/11/2014 12:55

I can see JRS falling further next week and can easily see 300p on the cards over the next couple of weeks and even 250p in the short term, by years end.

The rouble crashing won’t change anything today or tomorrow, but this is just the system starting to eat itself, this is just the system starting to crack. Historically, economic crisis triggers political crisis in Russia. No one knows when one of those cracks brings the whole thing down, but there’s a growing sense in Moscow that it will happen sooner than we all think.

When this happens I can easily see JRS falling to 200p or may be even a little lower, then will be the time to pile in.

However over the long term, 10 to 15 years. I still remain very positive when it comes to Russia.

I'm happy to continue to drip feed in to JRS and enjoy the 4% yield on offer as many Russian companies remain very profitable, growing income and profits by 10% a year.

[loganair] 06/11/2014 09:28

The Central Bank’s announced its new forex policy, which practically approved a free floating exchange rate for the rouble, at the start of trading yesterday, leading to the ruble having a rough day as the basket closed above 50 roubles.

[loganair] 06/11/2014 09:28

The Central Bank’s announced its new forex policy, which practically approved a free floating exchange rate for the rouble, at the start of trading yesterday, leading to the ruble having a rough day as the basket closed above 50 roubles.

Letting the rouble float free is the Kremlin’s way of opening an umbrella. For one thing, it insulates Russia from the falling price of oil: it may have dropped in dollars, but in roubles it’s about where it was in January.

[fabius1] 05/11/2014 23:01

log - Back in today.

[loganair] 05/11/2014 09:38

Russian energy giant Gazprom (JRS 5th Largest Investment) confirmed Wednesday that Ukraine's Naftogaz has paid the first tranche of $1.45 billion in arrears for Russian gas.

Last Thursday, after months of negotiations, the final round of gas talks between Russia and Ukraine, brokered by the European Union, ended with the signing of the so-called winter package agreement securing gas supplies to Ukraine until March.

Under the agreement, Russia will resume gas supplies to Ukraine for a price of $378 per 1,000 cubic meters to the end of 2014 and $365 for the same amount in the first quarter of 2015, while Kiev must pay Gazprom $3.1 billion it owes the company before the end of the year.

[fabius1] 04/11/2014 21:34

Log - How reliable is the divi? I ask because I recall (think it was the interims) that the fund manager stated the main aim was growth and although they currently pay a divi, it is nevertheless discretionary and subject to performance. I took that as a polite warning not to count too many chickens!

[loganair] 01/11/2014 12:50

I very much like Russia over the long term even though it's a messy place right now and any current investment will most probably start to look good after 5 years.

Investing in JRS is not something one does and thinks where by next year I'm doing great. Personally I'm holding these for years, looking 10 years out from here.

Russia is full of ordinary industries, relatively boring types of businesses that on the whole are well financed companies that are trading on a reasonable multiple of earnings that are producing free cash flow which the management are using properly, ie reinvesting and paying out in dividends unlike in the UK or USA where much of free cash flow has been used for share buy backs which are good for the directors of these companies and their share options as they get better tax advantages over dividends.

I much prefer dividends in my hands as I may have a better place myself to reinvest the money and at the moment many Russia companies are paying a dividend yield of around 4% and not a share buy back or hardly a share option in site.

[loganair] 01/11/2014 12:49

I very much like Russia over the long term even though it's a messy place right now and any current investment will most probably start to look good after 5 years.

Investing in JRS is not something one does and thinks where by next year I'm doing great. Personally I'm holding these for years, looking 10 years out from here.

Russia is full of ordinary industries, relatively boring types of businesses that on the whole are well financed companies that are trading on a reasonable multiple of earnings that are producing free cash flow which the management are using properly, ie reinvesting and paying out in dividends unlike in the UK or USA where much of free cash flow has been used for share buy backs which are good for the directors of these companies and their share options as they get better tax advantages over dividends.

I much prefer dividends in my hands as I may have a better place myself to reinvest the money and at the moment many Russia companies are paying a dividend yield of around 4% and not a share buy back or hardly a share option in site.

[loganair] 29/10/2014 09:29

Solid sales volume growth - Fertilizer sales up 4% YoY in 9M14. Phosagro (PHOR LI – Buy) (JRS 12th Largest Investment) published a 9M14 operating update. Total fertilizer production and sales increased 5.6% and 4.3%YoY in 9M14. Nitrogen-based fertilizer sales volumes rose 16.1% YoY to 1.0 mln tons, while sales of urea increased 24% YoY to 0.7 mln tons. Phosphate-based fertilizer sales volumes increased 1.1% YoY to 3.5 mln tons, DAP/MAP sales added 5.8% YoY to 1.8 mln tons and NPK sales volumes grew 4.7% YoY to 1.3 mln tons. Phosphate rock sales volumes continued to contract, falling 18.6% YoY to 1.9 mln tons.

[loganair] 29/10/2014 09:17

Revenues up 24% YoY, OIBDA margin improves. Detsky Mir, the retail unit of AFK Sistema (SSA LI – Not Rated)(One of JRS Investments), released strong 9M14 results yesterday. Revenues increased 24% YoY to RUB29.8 bln ($840 mln) and OIBDA increased 140% YoY to RUB945 mln ($27 mln) in 9M14, implying an OIBDA margin of 7.6%, a 3.7 ppt YoY improvement. Net income reached RUB613 mln ($17 mln), representing a 16-fold YoY increase.

[loganair] 29/10/2014 09:08

Russia has been increasing it´s Gold holding by between 20tons and 30tons per year, while China by around 400tons per year. Even Switzerland have been increasing their Gold holdings and Germany has asked the USA for it´s several hundred tons that they physically hold returned. However two years later the USA have only managed to return around 10tons to Germany which in my mind shouts out loud that the USA do not have the physical gold in it´s faults to return to Germany.

As for Russia what happened under Yeltsin he sold off state assets to his chums for around 10% of their true worth Vlad Putin then said to these now Oligarchs that they need to pay 50% of their original value otherwise he´ll take the company back.

As for Sistema, which I feel you´re currently mentioning and it´s buying the states holdings in Bashneft. Firstly the management sold the states holding to Sistema for around 1/4 of it´s true value and secondly the major shareholder of Sistema didn´t pay any taxes etc on the shares he bought in Bashneft. Unlike in the UK when asked to pay up they´d just be kindly asked to have a chat with the their chums in the inland revenue in Russia Putin just sends them directly to jail with out passing GO until he pays up what he owes.

Also if Putin had been a weak leader then Russia would now be in the same position as the Ukraine, being run by the Oligarchs.

At the current price JRS is paying a 4% dividend yield with a very good prospect of substantial capital gain. Once the sanctions are lifted I can see JRS very quickly returning to the 550p to 600p level.

As you can see by my posts on the other JRS thread many Russian companies are growing and increasing their profits at over 10% per year while maintaining or increasing their margins. Just think what would it be like holding shares in Sainsbury or Tesco if they were running at margins of between 10% and 20% instead of their currently tiny just 2%. Sainsbury profist instead of being around £700 million a year in Russia would be in the region of £3.5 billion plus per year.

I take the long term view 10 years or so and can see JRS trading at 4 times it´s current price at the end of this time frame.

If all hell brakes lose and the USA loses it´s status as the number one financial power with China and other nations taking over £20 could be the order of the day for JRS.

[johnyo] 29/10/2014 00:16

Igonair Some useful and interesting posts, I have 40% of my portfolio in Gold physical in Etfs & junior miners.possibly I am light on oil & Gas. I tend to agree with you the world is changing with the balance of power moving east. How much can Russia's leadership be trusted regarding nationalisations & oligarchs who get rebellious having their company assets favourably dispatched to more state friendly companies.Igonair do you think this share should be trading £7 if political stability was better ?

[loganair] 28/10/2014 15:46

Bengt Saelensminde:

Tick tock, tick tock… the countdown to the dollar losing its reserve status is really moving forward with pace now.

I’ve written before about the Shanghai Co-operation Organisation – the eastern bloc I think will come to dominate the faltering eurozone. It includes Russia, China, Iran and plenty of smaller nations that are bullied by US-led sanctions and dollar asset confiscation. They’re saying to the USA: “We don’t need your currency system!”

And now the counter-attack gets fiercer still…

That’s because there’s a group of nations that overtakes even the SCO’s power. Brazil, Russia, India, China and South Africa (the ‘BRICS’) just announced the first stage of their own new currency system.

These guys are fed up with the US and Western-centric banking and foreign policy, and now they’re doing something about it. They’re setting up the institutions you need if you’re going to run the world’s reserve currency yourself, like a mini-IMF and development bank.

Today let’s look at how we got to this point… and more importantly, what you and I can do to protect our investments when the domination of the dollar does finally come to an end.

The emerging markets want their dues

After the second world war, the US was the only major superpower, and certainly the only country with any money.

A new financial world order was created, and alongside it came institutions like the World Bank, the International Monetary Fund (IMF) and the Bretton Woods agreement. This confirmed the US dollar as the preeminent currency for cross-border transaction.

But since then, the US has lost a lot of its clout – and emerging markets have become more and more powerful!

Today around 20% of global trade comes from the emerging markets, a percentage that could be much higher if they were allowed more control over the global monetary system.

And yet they hold only 11% of the votes at the IMF’s table…

For years the IMF has promised change. In 2010 they promised a series of reforms that would give the southern and eastern nations a greater share of the pie. Alas, nothing has happened, and given Russia’s recent branding as pariah, there’s little chance of meaningful change happening.

So how have the emerging nations responded?

They’re cutting out the middleman

Well, they’ve given a great big two-finger salute to the IMF.

In July the BRICs signed an agreement to set up both a New Development Bank – capitalised at $50bn – as well as a Contingent Reserve Agreement (CRA) to bail out members in trouble, potentially stocked with $100bn.

The development bank will make loans to enable the emerging markets to establish key infrastructure projects – things that will bring electricity, transport, telecoms and water projects on line.

The contingency fund will help ward off speculators from trashing local currencies and help them help themselves during times of financial stress.

And to top it off, they’re setting up a system that will allow them to hold their massive reserve savings out of reach of the powerful Western nations and their hugely conflicted interests.

These commitments are formed on bilateral currency swaps that specifically avoid the US dollar. And that’s the point – while they all use the dollar as a mechanism for valuing their own currency, they no longer actually need the dollar to effect transactions.

And while this might sound like an insignificant circumvention, believe me, this new development has serious global significance. This is no idle threat.

You and I need to realign our interests… but how?

Three ways to protect yourself

First – make sure you’ve got exposure to the emerging markets.

It’s true that in the past, these markets have been highly volatile. But, of course, that’s because the West has made them that way. During times of stress, the Western banking system has hung them out to dry. Right now, these guys are saying “No more!” and I suspect that the emerging markets will prove even more defiant going forwards.

Second, make sure you’re well stocked up on resources.

Oil, gas and key minerals will be in increasing demand. The southern and eastern nations are pushing ahead with infrastructure projects, and a plan to take a seat at the high table. All of this requires resources. To my mind, we’re still in the middle of a global commodities bull market… it’s just that there’s been bit of a slowdown. Take a twenty-year view on commodity stocks, and I don’t think you’ll go far wrong.

Third, keep an eye on precious metals.

The Bretton Woods system, established after the second world war, was based on a dollar/gold relationship. Basically, a nation’s trade would be transacted in dollars and settled in gold.

But that relationship was dropped in 1971 – and now the emerging world is starting to impose its own rules. It looks increasingly like a new Bretton Woods… call it a Shanghai Woods.

So what? Well, these nations might choose to go back to a gold (or even silver!) based system. That’s why these metals are smart bets – at least until any new system becomes clear.

The new world bank is to be established in Shanghai. Russia will hold the first Chairmanship. India will be the first president – and Brazil will chair the board of directors. A regional office will be established in South Africa – yes, Africa is very much involved in the new regime.

I think that this emerging world bank will dwarf that of the current system in due course. These are the guys that are building a savings resource… these are the guys that are feeding the world economy’s consumer appetite. While Western nations bloat on the welfare/warfare state, the south and east make hay.

This is a game-changer. Hold your hands over your ears if you want, but I, for one, am taking this very seriously.

[loganair] 28/10/2014 08:38

EBITDA 4% above expectations. Magnit (MGNT LI – Under Review) (JRS Largest Investment) published strong 3Q14 unaudited results on Friday, which again beat market expectations on profit. Revenues increased 22% YoY to $5.3 bln (34% YoY growth in ruble terms), in line with the trading update published earlier. Gross profit increased 25% YoY to $1.6 bln, implying gross margin expansion of 0.8 ppt YoY to 30.1%. EBITDA rose 29% YoY to $665 mln, beating market expectations by 4% and implying that the EBITDA margin improved by a 0.8 ppt to a healthy 12.4%. Net income rose 40% YoY to $395 mln, 8% above the market estimate.