Jpmorgan Russian Securit... Share Discussion Threads

[bonnard] 13/1/2015 09:46

loganair.... thanks for the updates. I made my first purchase yesterday.

[loganair] 13/1/2015 09:45

Falling oil prices bring Russian sentiment under further pressure. Weak oil prices continue to pressure sentiment towards Russia early in 2015. Brent fell another 5% yesterday. Not surprisingly, the ruble and Russian equities started the new week on a negative note. The Russian CDS spread touched the 600 mark for the first time since 20 March, 2009, when the Russian economy was entering into its deepest recession so far this century. Stocks were unable to hold their ground, and the RTS index slid 3.3% to close at 757. A good trading update from Magnit helped the consumer stock index outperform, holding its decline to only 1.6%. The metals and mining sector was also among the relative outperformers, closing down just1.8%. On the other side of the spectrum, financials, the weakest sector YTD, lost another 5% on fears that the persisting stress in the Russian financial system will lead to more negative surprises down the road.

[loganair] 13/1/2015 09:42

Sales increase 37% YoY. Magnit (JRS Largest Investment) released a strong December 2014 trading update yesterday. Revenues rose 37.3% YoY to RUB87.4 bln ($1.6 bln) in December, representing a 4.1 ppt uptick in revenue growth MoM. For the full year 2014, revenues rose 31.6% YoY to RUB763 bln ($19.9 bln), in line with the company’s latest guidance. Revenues at Magnit's convenience stores were up 33% YoY to RUB62.7 bln ($1.1 bln) in December. Sales at the company's hypermarkets were up 33% YoY as well, reaching RUB17.6 bln ($317 mln), while sales from the "Magnit Family" segment surged 145% YoY to RUB4.0 bln ($72 mln). Revenues from the "hardware" segment rose 86% YoY to RUB3.0 bln ($55 mln).

[loganair] 12/1/2015 10:07

MOSCOW, January 12. The average price of Russia’s Urals oil blend declined by 9.5% in 2014 to $97.60 per barrel, leading expert of the Finance Ministry’s Tax, Customs and Tariff Policy Department Alexander Sakovich said on Monday.

In 2013, the average price of Russia’s Urals blend stood at $107.88 per barrel.

The Urals price fell by 44.4% in December 2014 from the previous year to $61.07 per barrel.

Russia’s Economic Development Ministry expects an oil price at $80 per barrel in 2015 while the Finance Ministry predicts an oil price of $60 per barrel this year.

[loganair] 12/1/2015 09:38

Inflation reached double digits in December … On 31 December, Rosstat released preliminary (based on a 64-item consumer basket) inflation data for 2014. In December, consumer prices surged 2.6% MoM while YoY growth jumped to 11.4% from 9.1% in November.

[loganair] 12/1/2015 09:36

Gazprom (JRS 5th Largest Investment) asks Turkish regulators to let it buy into Akfel. According to Vedomosti, Gazprom (GAZP RX – Hold) has filed an application with Turkey’s antitrust authority to allow it to buy a stake in Akfel Gaz, the Turkish gas importer and distributor, which has a 30-year contract with Gazprom for 2.25 bcm per annum. According to the Turkish publication, Daily Sabah, Gazprom aims to buy a controlling equity share from the Baltac? family.


Gazprom already owns much of Belarus and Greeces gas importers and distributors, buying these assets at knocked down distressed prices.

[togglebrush] 08/1/2015 16:10

JRS appearing on the FTSE250 leader board today

[votiem] 08/1/2015 06:31

Logan - many thanks and belated HNY. I'll continue to watch JRS. Best.

[loganair] 06/1/2015 13:50

French President Francois Hollande has called on the West to end sanctions against Russia but as the streets of Moscow sees an increase in angry protests, there is no sign that tensions are calming down any time soon.

Hollande said in an interview Monday that sanctions placed on Russia by Europe, the U.S. and Canada for its role in intervening in Ukraine, could be lifted if there is progress in talks between European leaders and Russia this month.

"I think the sanctions must stop now. They must be lifted if there is progress. If there is no progress the sanctions will remain," he told France Inter radio station.

Hollande added that he believed Putin would not look to ratchet up tensions further, saying the Russian President "doesn't want to annex eastern Ukraine - he told me that."

Attention is now focused on international talks set to be held on January 9 by foreign ministers from Ukraine, Russia, France and Germany. It is hoped that the meeting, in the Kazakh capital Astana, could make steps towards a peace agreement when the leaders of the same countries meet on January 15.

[loganair] 06/1/2015 13:35

Two reasons to stick to your guns on Russia - by Chris Sloley:

The volatility that has rocked the Russian market over the past six weeks is undeniable but there are two concrete reasons to remain positive, according to JO Hambro’s James Syme.

Syme, who runs the JOCHM GEM Opportunities fund, said Russian problems were clearly evident but he was undeterred.

This has seen Syme continue to hold a 5.6% position in Russia, which is 1.6 percentage points above the index weighting.

‘Russian equities have fallen sharply in international terms, but the pain has come through the currency rather than local equity prices,’ he said. ‘Our view has been, and remains, that a broadly neutral position in Russia is correct.

‘We absolutely recognize the economic, political and structural challenges that Russia faces, and furthermore have been negative on the outlook for commodities, but we have chosen to hold some exposure to Russia for two mains reasons.’

1 – Russian equities are incredibly cheap

‘In absolute terms, Russia is the cheapest equity market in the world, at an estimated 12-month forward P/E ratio of 4.7x. Even adjusting for sectoral make-up or historical valuations still leaves Russia looking very cheap in a world of relatively expensive equities,’ he said.

Pinpointing the Russian telecom sector, Syme said, the market is priced at 3.8x 12-month forward EV/EBITDA, which he said makes it the cheapest in the EM universe.

‘Some of that may be explained by the risk embedded in high bond yields. Brazil, though, also has high local bond yields, but its telecom sector trades at a 34% premium to Russia. The same pattern can be seen across Russian equities, from energy to consumer to banks.’

2 – Not suffering from existing EM headaches

Syme said Russia does not have the ‘original sin’ of many of its emerging market counterparts. That being a sustained current account deficit funded through portfolio flows and/or foreign exchange borrowing.

‘We remain extremely concerned about the risks that current account deficit financing have created in Brazil, Chile, Turkey, South Africa and Indonesia (a group of markets we are aggressively underweight),’ he said.

Syme said Russia has run an average current account surplus of 6.3% of GDP over the last 10 years. While some of that benefit has been lost through capital flight, Russia remains a net exporter, a net external creditor and has almost no sovereign debt outstanding.

‘In addition, despite lower oil and metals prices, the current devaluation is likely to be a huge boost to the country’s exporters,’ he said.

[loganair] 06/1/2015 13:23

Slowly, less and less trade between the Brics is being conducted in dollars.

Indian exporters are nudging the Commerce Ministry to institute a rupee payment mechanism for trade with Russia. The Indian tea industry, for which Russia was the largest export market in 2013-14, is set to take the agenda forward, with a delegation likely to visit Russia next month.

The rupee payment mechanism will allow Russian importers, currently struggling to acquire dollars, to settle payments in rupees with banks in both countries.

Data for October-December, to be out in January, are likely to reflect an overall drop in Indian tea exports to Russia by about 14-15 million kg this season. “If the rupee payment system is put in place, it will certainly give us an edge in Russia this year,” he added. Sources said the Federation of Indian Export Organisations (FIEO) will soon send a formal representation to Commerce Minister Nirmala Sitharaman on the payment mechanism.

Stiff competition from Kenya, which produced 432 million kg of tea, a record crop for the second consecutive year, is also challenging Indian exporters.

[loganair] 06/1/2015 11:19

Urals Oil around $52/bbl.

The price of Urals oil is often effected by the production coming out of Northern Iraq and Libya as the three oils are very similar.

Saudi Oil as is oil from Kuwait, Iran and Southern Iraq is Heavy Sour oil and sells for far less a price then Urals or Brent.

[loganair] 06/1/2015 10:44

Votiem:

Ten Largest Investments
JPMorgan Russian Securities
------------------------------
Magnit.(Supermarket)................12.6 %
Lukoil ADR..........................11.9 %
Sberbank of Russia (including ADR)...6.8 %
JSC MMC Norilsk Nickel ADR...........6.1 %
Gazprom ADR..........................5.8 %
Surgutneftegaz.......................5.5 %
Tatneft (including ADR)..............5.0 %
Moscow Exchange Micex-RTS............4.7 %
Megafon GDR.(Telecoms)...............4.2 %
Cherkizovo GDR.(Foods-Meat)..........3.6 %
....................................66.2 %

Also in the top 15 investments is Dixy (Supermarkets), Alliance Oil and Sollers (Automotive). I also believe Phosagro which is an agricultural fertilizer company whose shares have sky rocketed over the past 6 months.

Sistema with all it's problems, ie CEO arrested and half of the companies assets have been confiscated by the state to be resold at a later date for what they are really worth has been a massive drag on JRS as one time it was a top 8 investment by JRS.

[elmfield] 05/1/2015 22:36

I read these as well, thanks for taking the time to enlighten us.

[votiem] 05/1/2015 21:47

Logan - I very much appreciate your posts. Oil below 50 bucks now. Where do you see JRS going? How much of the portfolio in oil and how much in stocks that might actually benefit from low oil price? With thanks.

[greenpastures2] 04/1/2015 19:39

Putin should know by now what Russia has to do to get the West to remove its sanctions. If Russia stops acting like a bully towards its neighbours it will only have the lower oil price to worry about.

[loganair] 03/1/2015 23:46

What 2015 has in store for the Russian Economy by Ekaterina Blinova:

Ruble depreciation, coupled with falling oil prices, has triggered deep concerns about the future of the Russian economy among experts. However, the EU may abolish its sanctions policy in the beginning of 2015, since they have already taken their toll on Europe's fragile economic environment.

European businesses may increase their pressure on EU policy-makers and force Brussels to abolish its anti-Russian sanctions policy, note economic analysts, who have created various scenarios involving Russia's economic development and its relationship with the West.

Prominent European policymakers claim the sanctions policy has proven inefficient. In an interview with the Austria Press Agency, Austrian President Heinz Fischer has emphasized that the "economic crisis in Russia is capable of creating more problems than it is capable of solving," adding that tougher sanctions obviously would not result in "the desired political goals."

The ruble's depreciation, together with falling oil prices, has triggered deep concerns about the future of the Russian economy among financial specialists. Grand Capital analyst Yuri Prokudin believes that Europe's ongoing debate regarding anti-Russian policies may result in the partial or full cancellation of EU sanctions against Moscow in the first quarter of 2015. The analyst stresses that the EU's business and agricultural sectors are now openly expressing their growing dissatisfaction with Brussels' political course. He underscores that if the EU abolishes its sanctions, Moscow will regain access to advanced Western deepwater drilling technologies, which are especially important for Russia if it is to make use of the natural resources of the Arctic shelf.

Meanwhile, Washington views the sanctions as a political instrument, rather than an economic measure. The US has already benefitted considerably from the economic slide of the EU and Russia, notes Yuri Prokudin in an article he wrote for Rossiyskaya Gazeta.

However, the possibility that relations between Russia and the West will continue to deteriorate cannot be excluded, the expert warns. According to Prokudin, tougher sanctions will inevitably lead to food and medicine prices rising by up to 12-20 percent, bolstered by further ruble devaluation.

Meanwhile, sliding oil prices will obviously affect the ruble and Russia's economy as a whole. Major petroleum producers, particularly Saudi Arabia, are not planning to cut oil extraction yet. On the other hand, since China and Europe, the main oil consumers, are currently facing an economic slow-down, it is unlikely that they will increase oil consumption anytime soon. Thus far, there are no objective conditions for the rapid recovery of oil prices, believes Prokudin.

The analyst predicts that the ruble will settle at 50-55 rubles to the US dollar (with oil prices at $57-$62 per barrel), and 63-67 rubles to the euro in the beginning of 2015. If oil prices fall below $50 per barrel, the ruble will lose its position and the exchange rate will drop to 60 rubles to the dollar and 70 to the euro.

A European Union Institute for Security Studies report has pointed out that despite the Russian currency's sharp depreciation, the current downturn "seems less dramatic than the 2009 recession." Due to the fact that "Russia's budget is balanced and its public debt levels are low," and "the Central Bank of Russia's international reserves are still sizeable," the state can resist a 2-3 year "financial storm," noted Nicu Popescu, a senior analyst at the EU Institute for Security Studies in Paris in his report "Do sanctions on Russia work?" published in mid-December. The analyst emphasized that "by decreasing trade turnover, sanctions also decrease future Western leverage, hurt Western exporters and cost jobs in an already fragile economic environment."

"Finally, sanctions are pushing Russia into the arms of China, speeding up the formation of a non-Western global financial infrastructure which poses an alternative (and a challenge) to the existing Western-dominated system," Nicu Popescu stressed.

Indeed, Russia is currently strengthening its political and economic ties with China and India. Prominent Russian economists, particularly Sergey Glazyev, a Full Member of the Russian Academy of Science since 2008, point to the advantages of Eastern "state capitalism" in comparison with the "financial capitalism" of the West. They present a "third scenario," claiming that Russia has got enough inner resources to recover from the ongoing recession. Russia should restructure its Western-style economy and establish closer connections between industry, the financial elites and the state. The new strategic course would result in continuous growth and will make the country completely independent and self-sufficient, according to Glazyev.

[flying pig] 03/1/2015 21:31

Almost certainly Russia will not go bust. This is a great contra long term play with some short term downside but longer term great upside. IMHO

[loganair] 03/1/2015 12:54

Russia – rouble continues to fall on lower oil prices and sanctions. Russia is heading into recession if it is not already there.

Central bank is offering hard currency loans to companies and banks to service debts.

The central bank is accepting foreign currency debt obligations as collateral against the loans.

The move is intended to provide relief to companies which are not able to refinance loans due to Western sanctions.

Somehow we do not see Petropavlovsk taking advantage of the new policy.

[loganair] 02/1/2015 21:55

"Possibility of Turkey and Vietnam forming a 'Free Trade Zone' with the EEU (Eurasian Economic Union.)"


Turkey, a member of NATO, a defensive alliance created in order to resist Russian aggression. Sergei Kapanadze, director of the Tbilisi-based Georgia’s Reforms Associates and a former deputy foreign minister of Georgia, has an important article out in the latest issue of Turkish Policy Quarterly, the top journal of contemporary Turkish politics and studies, examining Turkish trade with Abkhazia.

What he finds is that while Turkish officials pay lip service to Georgia’s territorial integrity, Turkish trade with the Russian-backed breakaway state is booming. Senior Turkish Foreign Ministry officials have visited Abkhazia to discuss developing relations, and in June 2014, a delegation of Turkish parliamentarians visited Abkhazia as well. Kapanadze wrote that 60 percent of Abkazian imports come from Turkey, while 45 percent of its exports go to Turkey. In other words, Turkey’s willingness to make a quick buck on Abkhazia effectively subsidizes the Russian backed state and the fiction of Abkhazian independence. While hard numbers are difficult to come by, Kapanadze estimates the trade volume between Turkey and Abkhazia in 2013 as $600 million. That might not seem like much, but that’s more than the total trade balance between the United States and Georgia ($425.8 million) the same year. Turkey, meanwhile, complains when the Georgian navy stops Turkish smuggling ships.

[loganair] 31/12/2014 21:12

Happy New Year to you all from St Petersburg

[loganair] 31/12/2014 21:07

Happy New Year to you all from St Petersburg

[loganair] 31/12/2014 21:06

Happy New Year to you all from St Petersburg