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[loganair] 19/12/2014 11:15

Russia manages to recover some of its recent losses. The Russian financial markets remain turbulent. The stress levels in the banking system have climbed to multi-year highs, as reflected by the dynamics in the interbank market and reports of depositors pulling their money out of banks. On the positive side, President Putin's press conference yesterday gave a boost to AFK Sistema as well as MTS and Bashneft. However, other than that, the address was a disappointment, as investors were left with the impression that no new measures will be implemented with regards to the economy and the financial markets, and that they will simply have to wait for the "inevitable" cyclical upturn. Putin suggested that the turnaround would most likely come in two years' time – not a reassuring statement by any measure. The currency market appears to have stabilized somewhat while yesterday's rise in the price of oil helped improve sentiment towards Russian stocks as well. As a result, the RTS index rose 6.5%, recovering some of its recent losses.

[votiem] 18/12/2014 22:06

Poor Old Russia - suspicious - xenophobic - corrupt - oil revenues on the floor - total basket case. Can see this stock falling to below 150

[envirovision] 17/12/2014 20:05

Relax, cash in on it. Weve booked a 5 star hotel for 2 for under 250 next to red square and have 2000 rubles for 200 and are very much looking forward to seeing Moscow. I dont think worry is the correct course of action, I think having a good time is far more important. Life is short, enjoy yourself !

[loganair] 17/12/2014 19:58

Russia is country with $400 billion in foreign currency reserves and just $38 billion in dollar-denominated debt, a mere $6 billion of interest and principal payments is due next year, therefore the fall in the Russian market and rouble is well over done, being caused, driven simply by 'Fear' and 'Panic.'

[loganair] 17/12/2014 19:55

Russia is country with $400 billion in foreign currency reserves and just $38 billion in dollar-denominated debt, a mere $6 billion of interest and principal payments is due next year, therefore the fall in the Russian market and rouble is well over done, being caused, driven simply by 'Fear' and 'Panic.'

[loganair] 17/12/2014 17:51

JRS up.....7%
Rouble up 12%
RTS up....14%

[edwardt] 17/12/2014 15:27

good luck, i wish i could look that far out. i only hope that you don't have your investee companies stolen from you...

[loganair] 17/12/2014 08:48

State stepping in to support the rouble. Yesterday Economy Minister Alexey Ulyukayev said that the government will provide support for the rouble beyond yesterday's dramatic increase in the key rate. The government will focus on providing large amounts of hard currency liquidity via Central Bank repo operations, and the CBR will decrease the amount of rouble liquidity it makes available to the banks. Ulyukayev said that these steps will be taken to increase the supply of hard currency in the forex market and reduce the demand for currency stemming from the excess of rouble-denominated assets. In addition, under no circumstances does the government plan to introduce capital controls. Ulyukayev acknowledged that the recent rate hike was a necessary measure which, unfortunately, was taken too late. Although the rate hike will hurt the economy, the Economy Ministry expects that the revisions to its official macroeconomic forecast will be relatively small.

[loganair] 17/12/2014 08:44

Economy could come to a sudden stop - Full-blown crisis developing in Russia. A full-blown currency and financial crisis scenario seems to be unfolding in Russia in what was supposed to a quiet week as we head into the holiday season. Russian asset prices saw double-digit swings yesterday as volatility climbed to crisis levels. The financial system and banks in particular are clearly in danger, as a crisis of trust seems to be developing as well. Strangely enough, the RTS index finished the day at 630, exactly the level we had in our deep-recession forecast for 2015. Hence, it took the stock market all of a month to fall to the lowest level that we believed it could reach next year if the economy were to dramatically contract and the risks of investing in Russia were to rise to levels corresponding to a deep recession. Yet, we are far from cheerful, as we believe the worst is yet to come. There is a risk that the economy will come to a sudden stop, along with the banks and the overall financial system. Hence, we may have underestimated the level of financial risk in the event of a full-fledged panic. A bank run could be in the cards. We will once again refrain from predicting where the RTS index will open today, as the situation could change rather quickly. We believe the risks are still on the downside.

[loganair] 16/12/2014 21:06

Russians' Economic Expectations:

The economic problems of Russia are not foremost on people's minds. The plunge of the rouble, the decline in oil prices, a general slowdown in the economy and the effect of Western sanctions all appear in the West to be hammering the Russian economy. The decline in the rouble has affected foreign travel plans, but the public has only recently begun feeling the real impact of these factors, particularly through inflation.

But there was another reason given for the relative calm over the financial situation, and it came not only from government officials but also from private individuals and should be considered very seriously. The Russians pointed out that economic shambles was the norm for Russia, and prosperity the exception. There is always the expectation that prosperity will end and the normal constrictions of Russian poverty return.

The Russians suffered terribly during the 1990s under Boris Yeltsin but also under previous governments stretching back to the czars. In spite of this, several pointed out, they had won the wars they needed to win and had managed to live lives worth living. The golden age of the previous 10 years was coming to an end. That was to be expected, and it would be endured. The government officials meant this as a warning, and I do not think it was a bluff. The pivot of the conversation was about sanctions, and the intent was to show that they would not cause Russia to change its policy toward Ukraine.

Russians' strength is that they can endure things that would break other nations. It was also pointed out that they tend to support the government regardless of competence when Russia feels threatened. Therefore, the Russians argued, no one should expect that sanctions, no matter how harsh, would cause Moscow to capitulate. Instead the Russians would respond with their own sanctions, which were not specified but which I assume would mean seizing the assets of Western companies in Russia and curtailing agricultural imports from Europe. There was no talk of cutting off natural gas supplies to Europe.

If this is so, then the Americans and Europeans are deluding themselves on the effects of sanctions. In general, I personally have little confidence in the use of sanctions. That being said, the Russians gave me another prism to look through. Sanctions reflect European and American thresholds of pain. They are designed to cause pain that the West could not withstand. Applied to others, the effects may vary.

My sense is that the Russians were serious. It would explain why the increased sanctions, plus oil price drops, economic downturns and the rest simply have not caused the erosion of confidence that would be expected. Reliable polling numbers show that President Vladimir Putin is still enormously popular. Whether he remains popular as the decline sets in, and whether the elite being hurt financially are equally sanguine, is another matter. But for me the most important lesson I might have learned in Russia — "might" being the operative term — is that Russians don't respond to economic pressure as Westerners do, and that the idea made famous in a presidential campaign slogan, "It's the economy, stupid," may not apply the same way in Russia.

The Ukrainian Issue:

There was much more toughness on Ukraine. There is acceptance that events in Ukraine were a reversal for Russia and resentment that the Obama administration mounted what Russians regard as a propaganda campaign to try to make it appear that Russia was the aggressor. Thee are two points, first was that Crimea was historically part of Russia and that it was already dominated by the Russian military under treaty. There was no invasion but merely the assertion of reality. Second, there was heated insistence that eastern Ukraine is populated by Russians and that as in other countries, those Russians must be given a high degree of autonomy. One scholar pointed to the Canadian model and Quebec to show that the West normally has no problem with regional autonomy for ethnically different regions but is shocked that the Russians might want to practice a form of regionalism commonplace in the West.

Whatever Russia might do elsewhere, Ukraine is of fundamental strategic importance to Russia. Even if the east received a degree of autonomy, Russia would remain deeply concerned about the relationship of the rest of Ukraine to the West. As difficult as this is for Westerners to fathom, Russian history is a tale of buffers. Buffer states save Russia from Western invaders. Russia wants an arrangement that leaves Ukraine at least neutral.

For the United States, any rising power in Eurasia triggers an automatic response born of a century of history. As difficult as it is for Russians to understand, nearly half a century of a Cold War left the United States hypersensitive to the possible re-emergence of Russia. The United States spent the past century blocking the unification of Europe under a single, hostile power. What Russia intends and what America fears are very different things.

The United States and Europe have trouble understanding Russia's fears. Russia has trouble understanding particularly American fears. The fears of both are real and legitimate. This is not a matter of misunderstanding between countries but of incompatible imperatives. All of the good will in the world — and there is precious little of that — cannot solve the problem of two major countries that are compelled to protect their interests and in doing so must make the other feel threatened.

[topvest] 16/12/2014 17:47

Who cares about the short-term. I bought at 230p and more than happy with that as a long term buy. Actually, it's up 30p already. Could be down more tomorrow. Who know's. Long-term it's a good prospect.

[edwardt] 16/12/2014 13:32

what is % invested here in rouble assets? if it is as i suspect very high, this trust has much further to fall. it should be down 25% plus today. it is not. gbp:rub down 12 and russian index down similar amount....

[topvest] 16/12/2014 12:54

I would go further than this. 90% chance of doubling or tripling your money from here in 3/5 years. Got a few at 230p.

[topvest] 16/12/2014 12:35

Well I've just bought some. It may go down further, but the chance of the shares being much much higher in 5 years is VERY HIGH. BARGAIN!

[loganair] 16/12/2014 12:16

Over the past 24 hours all I see when it comes to Russia is 'Panic' and 'Fear' in the markets and people saying 'you can't trust Russian's.'

Rouble down nearly 20% today.

In rouble terms Urals oil is trading at an all time high of over 4,400 roubles/bbl.

The Russian government needs around 3,600 roubles/bbl to balance the state budget.

[loganair] 16/12/2014 10:15

MOSCOW--The Bank of Russia's chairwoman Elvira Nabiullina said on Tuesday that its decision overnight to raise interest rates sharply has increased the risks of betting against the rouble, which, she added, is currently undervalued.

"We need to make speculators' strategies riskier," Elvira Nabiullina said.

Elvira Nabiullina confirmed that the central bank has no plans to impose any "administrative restrictions" to address the rouble's depreciation, brushing off fears of capital controls.

In the central bank's first comments since it raised its key rate by 6.5 percentage point to 17%, Elvira Nabiullina said the monetary tightening was primarily aimed at curbing inflation, but will also have an indirect impact on the rouble rate.

The central bank let the rouble float in November, which sent the currency to record lows. In an effort to stop the rouble from falling, the central bank has sold just $8 billion from its reserves this month and raised rates twice.

Elvira Nabiullina said that the rouble's weakening is a "signal" that Russia has to learn how to live in new conditions, relying on internal ruble-priced resources and proceeding with substitution of imports. When asked how she would calm households amid the currency's rapid depreciation, she said that the key aim was to make internal developments less dependent on external conditions.

She also said that the rise in rates should make rouble deposits more attractive.

[loganair] 16/12/2014 09:53

Panic - Rouble tumbles, CBR responds, markets shaken, economy will dive deeper. Yesterday may go down as one of the darkest days in the history of the Russian markets. The rouble tumbled nearly 10%, putting prices on all Russian assets under severe pressure. The CBR unexpectedly hiked the key rate by 650 bps to 17% overnight in order to stem the panic. The decision has reportedly already helped improve sentiment towards the rouble. However, there is little doubt that we are in for another roller-coaster ride today. Yesterday margin calls were clearly a major factor behind the big daily move of the RTS. Today, at least at the open, we may see the opposite, but there is no certainty whatsoever that those who had been betting against the rouble will begin hedging their bets, as the decision, although it could stem the panic in the short term, will undoubtedly cause a great deal of damage to the economy in the medium term. The CBR's decision is certain, however, to bring the mortgage markets to a sudden halt, creating extraordinary difficulties for the banks that had been relying primarily on CBR financing and wreaking havoc in the Russian financial markets. Considering what has been said above, it has become extremely difficult to make a positive case for Russian equities. On top of Russia's domestic troubles, Brent has collapsed to close to $60/bbl and the preliminary December PMI data from China this morning disappointed. The market is buckling up for a very bumpy ride today and will not even venture a guess as to where the RTS will open.

[togglebrush] 16/12/2014 09:49

Currency crisis have a long history in Russia. But they are used to them and they survive them !!!
.
August 1998 financial crisis in Russia was preceded on 1st January by the consolidation of the Rouble. 1,000,000 became 1,000.00 with three zeros removed and the Kopek reintroduced. Even before this loans and overdrafts were difficult to get. We were checked for firearms before seeing a Bank Manager. It was reported three Bank Managers had been shot by angry customers.
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Then on or around the 18th August the system failed and hyper inflation began happening. You could argue about the price of a meal; was it price on menu outside; price when meal was served; or price when bill arrived; and all were significantly lower. A good $200 Winter coat was bartered for a sweet jar full of pickled cabbage. Bank accounts were temporary closed and Foreign Currency accounts were frozen for many months.
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Airline magazines were full of earlier crisis going back into the late 1800's which was in time of the Czar's. It seems like this was a national routine which people are used too.

[loganair] 16/12/2014 09:48

Sales increase 30% YoY in November. Yesterday, Dixy (DIXY RX – Under Review) (JRS 12th Largest Investment) published a strong trading update for November: revenue growth accelerated 0.7 ppt MoM to 30.2% YoY to RUB19.9 bln ($434 mln). Growth was again driven by the strong performance of the core Dixy division, as sales increased 34.8% YoY to RUB15.9 bln ($346 mln). Sales at the Victoria division rose 15.8%1 YoY to RUB2.5 bln ($55 mln), implying 2.2 ppt MoM deceleration. Revenues at the MegaMart division increased 12.3% YoY to RUB1.5 bln ($32 mln) versus 10.4% YoY growth in October.

[loganair] 15/12/2014 22:17

Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

[loganair] 15/12/2014 22:17

Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

[loganair] 15/12/2014 22:07

Russia is in the grip of full-blown currency crisis after a panic scramble for dollars sent the rouble crashing 13pc, with contagion spreading to Brazil, Indonesia and across the emerging market nexus.

The rouble smashed through resistance to an all-time low of 65.5 to the dollar in a crescendo of selling on Monday, as oil prices continued to slide and markets braced for a likely default in Ukraine. The Russian currency has lost half its value since President Vladimir Putin first sent forces into Ukraine, setting off a chain of events that the Kremlin can no longer control.

“This is being driven by pure fear. We have crossed a line and the crisis is now self-feeding,” said Chris Weafer, from Macro Advisory in Moscow.

Credit default swaps (CDS) measuring bond risk in Russia soared 67 points to 556 on Monday, pricing in a 28pc chance of a sovereign default within five years. Ukraine's CDS spiked 389 points to 2414. The country seems headed for near certain debt restructuring, with serious implications for Russian and Austrian banks.

“The rouble is behaving as if we were back to the default crisis in 1998 but the situation is nothing like that,” said Mr Weafer.

“The Russian balance sheet is one of the strongest in the emerging markets. There is no danger of default whatsoever. The weaker rouble is actually protecting the budget and is preventing the collapse of the economy.”

[loganair] 15/12/2014 20:56

Russian and Emerging Market assets would take hit on worsening tensions, but implications are likewise clear for other asset classes. Strong trade links between much of Western Europe and Russia leave the Euro and Euro-denominated assets especially vulnerable; lingering sovereign risks in the Euro area would likewise take center focus once again.

[loganair] 15/12/2014 20:35

“There is panic in local markets driven by the inaction of the central bank,” said Benoit Anne, head of emerging markets at Société; Générale.

"The time to buy is when there's blood in the streets," not quite there as only 'Panic' but we are getting there.

It’s early yet, Investors would do well to Batten Down the Hatches and proceed with caution on signs that the current crisis could get far worse before it gets better.

Keep an eye on the rouble exchange rate, price of crude oil, official Russian responses, and further geopolitical rumblings for signs of further danger.

In the meantime, investors would as usual be well-advised to keep focused on the long term– equity investing is a marathon, not a sprint.”