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[loganair] 10/6/2015 09:51

Economy will further deteriorate before it starts to improve in 4Q15 - Slump in Russia’s economy intensifies in April. According to Rosstat, Russia’s economy sharply deteriorated in April. Industrial production dropped 4.5% YoY due to a dramatic decline in manufacturing, which fell 7.2% YoY. The last time such poor growth rates were seen in industry was 2009. Output contracted in all key segments except chemicals and petrochemicals. In spite of the dramatic decline in food imports, food production growth turned negative due to weak consumer demand (retail trade volumes dropped 9.8% YoY), which was hit by falling real incomes (down 4% YoY) and a deep contraction in real wages (down 13.2% YoY). Capital investment dropped 4.8% YoY after falling 2.7% YoY in March. Construction shrank 5.2% YoY, while cargo turnover dropped 1.5% YoY. Unemployment unexpectedly fell to 5.8% from 5.9% in March. We estimate that Russia’s economy contracted 4% YoY in April, which is about in line with the Economy Ministry's estimate of a 4.2% YoY contraction.

[loganair] 09/6/2015 10:15

Yesterdays stock performance in Russia was mixed, and the RTS index closed unchanged. Surgut and Lukoil local shares closed 1.9% and 0.7% lower, while Rosneft gained 1.2%. Sberbank shares lost 2%, while VTB gained 1%. The Ukraine issue is back in the market spotlight after participants at the G-7 meeting indicated their willingness to keep sanctions against Russia in place. The EU will discuss its sanctions against Russia later this month.

[loganair] 08/6/2015 18:10

By Mateusz Polak - The ruble may have depreciated too much in the last weeks. The levels of 50/USD and 55/EUR may be too high and not wanted by the CBR. I would expect the CBR to attempt stabilizing the ruble in the coming days (primarily by ceasing to buy foreign currency, then possibly by re-activating the repo mechanism). If you can weather the high volatility, the ruble is a very good long-term investment from a fundamental standpoint (buy when blood is shed), and the carry trade only makes it better. I would also expect the CBR to keep the rates at current levels for some time, as they seem to have overdone their attempt to weaken the ruble. Barring open conflict with Ukraine, I would expect the ruble to stabilize in the coming months regardless of everything, as investors anchor themselves to the new free-floating exchange rates, just as it is happening with the CHF.

[loganair] 08/6/2015 10:31

The Russian Central Bank forecasts quarterly increase in Russia’s GDP by 2015 end, the Russian Central Bank Chief Elvira Nabiullina said Monday.

"If there are no new shocks by the end of this year, we expect to see quarterly economic growth ," she said.

According to Nabiullina, inflation is currently under control, stagflation risks have passed.

"We continued currency interventions in the beginning of the last year and supported the rate in order to cool down the market’s reaction to Crimean events and to support the ruble rate. We spent about $83.5 bln for interventions in 2014 on the whole," Nabiullina said.

The Central Bank bought slightly more than $3 bln to replenish international reserves in May - June 2015, she noted.



At the current rate it will take the Central Bank around 2 to 2 1/2 years to completely replenish their FX reserves. Currently their Gold reserves stand at $48bln and rising and rising as a percentage of their FX reserves.

[loganair] 08/6/2015 10:04

EBITDA 3% below expectations. Dixy Group (JRS 9th Largest Investment) published weak 1Q15 results on Friday. Profitability was disappointing. Revenues rose 28% to RUB64 bln ($1.0 bln), in line with the previously released trading update and EBITDA dropped 13% YoY to RUB2.8 bln ($45 mln), missing the market forecast by 6.5%, with the EBITDA margin contracting 2.1 ppt YoY. The company reported a net loss of RUB140 mln ($2 mln), negatively affected by a forex loss of RUB247 mln.

[loganair] 05/6/2015 13:26

JSC TATNEFT (JRS 8th Largest Investment) took the first place among the world's innovating leaders in ranking.

TATNEFT was top of the list of the best innovative companies in the area of geological exploration (oil and gas). The report, submitted by The Future Is Open: 2015 State of Innovation presented the results of technological innovation over the last decade. Calculation results of innovations introduction and performance trends in the global technology development were summed up by experts on the basis of the number of published articles and patents registered in 12 major industry and science braches.

The resulting Joint Stock Company's high appraisal of innovative activity is the result of a large-scale work of all TATNEFT's services, aimed at increasing the production efficiency, protecting intellectual property, strengthening business reputation and increasing information transparency.

During 2014, 10,017 authors of TATNEFT introduced 15,123 innovation proposals, inventions and utility models. The Company received 280 titles of protection for inventions, utility models and computer programs from the Federal Institute of Industrial Property.

Currently, there are 1,415 operating patents at TATNEFT which included 51 license agreements with various organizations for the right to use the TATNEFT's inventions, utility models and computer programs.

During the 1st quarter of the current year, the Company filed 53 applications with the expected result of the intellectual property and received 73 patents (certificates)

[loganair] 05/6/2015 13:03

Alrosa (JRS 9th Largest Investment) Q1 net profit rise to $409 million on higher diamond prices.

Russian diamond mining company Alrosa said on Thursday its net profit rose to 22.2 billion roubles ($409 million) in the first quarter of 2015, up almost fourfold year-on-year due partly to a weaker rouble.

Alrosa, the world’s top producer by output in carats, and other Russian exporters have benefited from the depreciation of the rouble, weakened by Western sanctions and lower oil prices, as their costs fell in dollar-terms, supporting margins.

“First quarter results were mainly driven by a favourable foreign exchange market environment,” chief executive Andrey Zharkov said in a statement.

The company also said it achieved higher prices for its gem-quality rough diamonds due to a better product mix, which helped to compensate for weaker market demand.

“The diamond market in the first quarter was less active compared with (the same period last year) due to a lower demand for rough diamonds from Indian cutters and polishers,” Zharkov said.

(EBITDA) rose to 42.9 billon roubles, up 65 percent compared to the previous year, the company said. Revenue increased 31 percent to 74.6 billion roubles.

The miner has said it expects net income of 100 billion roubles in 2015 and to increase sales by one percent, taking advantage of rising production and using offtake from its stock.

[loganair] 05/6/2015 12:56

Sberbank (JRS 4th Largest Investment)increased deposits from Germany sixfold this year, allowing it to free up euro liquidity that the bank is struggling to obtain amid international sanctions.

Deposits at Sberbank Direct, which started to accept German clients in July, rose to 1.5 billion euros ($1.6 billion) now, from 232 million euros at the end of last year, Sberbank’s deputy Chief Executive Officer Alexander Morozov said Thursday. That allowed Vienna-based Sberbank Europe AG, which is mainly active in central and eastern Europe, to repay a 1 billion-euro loan to the Moscow-based parent, he said.

“We’re lowering the share of loans to deposits so the European bank is independent in terms of financing,” Morozov said. Sberbank Europe still owes several hundred million euros and “the debt redemptions will continue,” he said.

U.S. and European sanctions over the Ukraine conflict have shut out Russian lenders from international funding markets, including Asia, Morozov said Wednesday. The Austrian unit, which offers lending to consumers and companies in about a dozen nations in central and Eastern Europe, provides a window for business in the region.

Sberbank, which bought the eastern European unit of Oesterreichische Volksbanken AG in 2012 allowing it to tap into yield-hungry German savers for liquidity.

Sberbank is among the three top recommendations for retail savers at tagesgeldvergleich.net, a website monitoring overnight money rates in Germany. Sberbank currently pays 1.1 percent interest for overnight deposits, according to the website.

Back at home, Russian lenders have been hit hard by deposit withdrawals and need to lure about $35 billion in funds to bolster stability, Morozov said last month.

Sberbank Europe has been exempted from sanctions imposed on their parent company last year. Its cross-border relevance prompted the European Central Bank to add it to the list of banks it directly supervises and is undergoing the ECB’s comprehensive balance sheet assessment this year.

[loganair] 05/6/2015 11:14

Russia’s $500 Billion Buffer Plan Adds to Risk for Ruble Buyers by Ksenia Galouchko:

As if investing in Russian markets didn’t carry enough risks, the central bank just added another one: a $140 billion ruble-sale plan.

Bank of Russia Governor Elvira Nabiullina said Thursday she plans to buy foreign currencies to boost reserves to $500 billion in coming years. Purchases of about $2.9 billion helped turn this year’s best-performing currency into the worst in the past month. The ruble, which is the most volatile currency globally, weakened to more than 55 against the dollar for the first time in two months on Thursday as bonds tumbled.

“We still hope the central bank will stop buying currency as the exchange rate moves to 55-57, or at least diminish the interventions considerably, otherwise this is very negative,” Oleg Kouzmin, a former central-bank adviser who’s now an economist at Renaissance Capital in Moscow, said by e-mail Thursday. “Now, in addition to oil and geopolitics, we have to consider the Bank of Russia’s policy of reserve accumulation as a risk factor.”

Russia is building financial buffers as sanctions over its role in Ukraine and weaker oil prices push the economy into recession. While the start of dollar purchases on May 13 coincided with official statements that the ruble’s advance had gone too far, the currency’s weakening spurred by flare-ups in Ukraine this week risks stoking inflation.

No Timetable:

Russia’s start of foreign-currency purchases last month prompted criticism by banks including PAO Rosbank and ING Groep NV as going against the central bank’s so-called free-float policy, in which market conditions set the ruble’s exchange rate.

The authority isn’t abandoning the program, though “more frequent interventions on the currency market” are possible during the “initial phase” of the regime adopted in November, Nabiullina said on Thursday.

The central bank has no timetable for how fast it wants to reach the $500 billion reserve target, according to Nabiullina. Reserves tumbled 24 percent last year as Russia took steps to slow the currency’s decline, the biggest worldwide at 46 percent, in the face of declining oil prices and U.S. and European Union sanctions imposed after Russia’s annexation of Crimea in March 2014.

Rebuilding Stockpile:

The stockpile was $356.5 billion at the end of last week, up from an eight-year low of $350.5 in April, central bank data sow. The Bank of Russia has purchased about $2.9 billion since the new reserve-accumulation program -- which involves buying between $100 million and $200 million daily -- started in mid-May.

Nabiullina’s comment on reserves was “somewhat unexpected,” according to Ivan Tchakarov, an economist at Citigroup Inc. in Moscow and the second-most accurate ruble forecaster in a Bloomberg survey of the past four quarters.

“I don’t necessarily think this is a goal set in stone, but rather a desired or optimal level they would like to achieve eventually in order to have a nice buffer,” Tchakarov said by e-mail on Thursday. “Depreciation towards 60 will make the Bank of Russia revisit their buying policy.”

The Bank of Russia doesn’t rule out taking a pause in daily foreign-currency purchases, RIA Novosti reported yesterday, citing First Deputy Bank of Russia Governor Dmitry Tulin.

Ukraine Conflict:

The currency slid 2.5 percent to 55.6770 at 5:28 p.m. in Moscow on Thursday, the lowest level since April 7. Government bonds fell for a second day, pushing five-year yields up 17 basis points to the highest since April. The ruble’s three-month implied volatility, which reflects expectations for currency swings, was 21 percent, compared with 18 percent for Brazil, the second-highest worldwide.

Tensions eased in Ukraine’s easternmost regions on Thursday after a pickup in fighting the previous day resulted in the deadliest period in three months. Flare-ups risk endangering a cease-fire sealed in Belarus in February, which has curbed deaths in the more-than-yearlong conflict and eased concern over more sanctions.

“Escalation of tension in eastern Ukraine where the fragile cease-fire is holding on a shoe string” may force Nabiullina to scale back foreign-currency purchases as the exchange rate approaches 60 per dollar, according to Piotr Matys, a London-based foreign-exchange strategist at Rabobank, ranked among the five most accurate ruble forecasters. “The key word is ‘flexibility’ given that market conditions can change rapidly.”

[loganair] 05/6/2015 10:06

Russian stocks, however, dropped sharply after Tuesday's bounce, mainly on reports that the Minsk Agreement had been violated by both sides in the Ukrainian conflict. The RTS index ended yesterday's volatile trading session down 2.7% at 947. The reports from Ukraine sent the ruble deep into the red. Russia's currency finished the day below RUB54.2/$. Brent futures slid below $64/bbl.

[firtashia] 04/6/2015 19:51

Think I'd prefer to take my chances with the US judicial system though, Loganair :-)

[loganair] 04/6/2015 16:42

firtashia - I am not saying it is easy to do business in Russia, as I know from personal experience it is rather difficult what I am saying is that if Russia has a weak leader like Yeltsin was then the oligarchs would have torn Russia apart in continuing power struggle leaving even less for the average Russian. Without Putin there would be even less Law with the oligarchs taking every thing of value for themselves.

By far the biggest flouter of international law is the USA and the cause of half the trouble in the world today. I know Syria quite well and the average middle class Syrian woman is terrified if the present government falls and it will also become another failed state like Libya where the government has to sit in a ship in the middle of Tripoli harbour as it is too dangerous in Tripoli itself.

[firtashia] 04/6/2015 16:27

Loganair- with respect to Crimea, under Ukrainian rule Crimea was an autonomous republic within Ukraine, with its own functioning parliament. This was indeed confirmed at the '91 referendum & was not withdrawn at any time during independence. During an interview earlier this year, the the Russian GRU operative Igor Strelkov,admits having to round up Crimean parliamentary deputies at gunpoint in order to ensure their compliance in passing a bill committing the republic to hold a sham "independence referendum".
I understand that capitalism has no scruples and that human rights and democracy are not factors taken into account when contracts are signed. I also understand why you believe it is easier to do business in Russia, as you believe its leadership is so effective. However the flip side is that there are no rules in Russia; if Putin is prepared to increasingly flout international law why do you believe any written contract between the Russian state and international institutions is worth the paper it is written on? I think the likes of Bob Dudley learnt this lesson the hard way.

[loganair] 04/6/2015 15:26

firtashia - Agreed about Putin. What I am saying is if Putin was a weak leader then Russia would become like the Ukraine, a real basket case.

Out of all the up and coming countries Russia has the highest percentage of middle class and has come a long way since the mid 1980's when I first visited Russia (St Petersburg, Moscow, Novosibirsk and Irkutsk). Since 2000 I have regularly visited St Petersburg, Moscow, Kazan and Cheboksary and seen a huge change for the better except for Moscow which has become a typically dirty grubby city, going about it's business making as much money as possible.

Look at Britain, after 10 years still discussing whether to build a high speed train London to Birmingham and as each year passes the cost hugely increases. If Putin had been in charge by now Britain would have the high speed train not only to Birmingham up and running, but all the way to Manchester, Liverpool, Leeds and Sheffield and at 1/4 the cost.

Crimea, when they voted in 1991, I understand were given a huge amount of autonomy by the Ukrainian Government to run their own affairs, which the Government took back.

You seem to be agreeing with me that KievRus was the original Russia, just we are expressing the same thing but in a different way.

Last year, the Tartar's I understand are only a small percentage of the Crimea population, that for the vast majority who were living in the Crimea are native Russians and that Russian was their first language.

[firtashia] 04/6/2015 14:37

Loganair- let me take the time to address some of the factual inaccuracies in your post.
"ethnically many of those in the south east of Ukraine are Russians"- According to the 2001 population census approximately 17% of the Ukrainian population consider themselves to be ethnically Russian. Only Zakarpattia (in the west Ukraine), Donetsk, Lugansk and Crimea are populated by significant populations (i.e greater than 20%) of people who consider themselves to be ethnic Russians.
"the Ukrainian government made them into de facto second class citizens by banning Russian language for official use". When was this,and how do you define "official". Are you deliberately trying to confuse the language of government with everyday common use?
"Crimea was historically part of Russia for 1000 years". Crimea was conquered by Katherine the Great, in the 18th century. Its majority population, the Tatars, were subsequently forcably expelled from the peninsula in 1944, by a man who is regaining popularity in Russia. Strangely, the Tatar population who returned, despite also being Russian speakers as a consequence of forced deportation, do not feel threatened by your assertation that the Ukrainian government has made them second class citizens, and are strong supporters of the Ukrainian state. Sadly, the Tatars were unable to recently commemorate the anniversary of their deportation in Crimea itself.
"Crimea was historically part of Russia for 1000 years". How so then, that a majority of Crimeans (56%) voted in the independence referendum of 1991 to support the Ukrainian declaration of independence. Subsequent independent opinion polls, taken before the February 2014 invasion, consistently showed majority support for Ukrainian statehood, despite a majority ethnic Russian population. Current "Crimean prime minister" Aksyonov scored 4% when standing for the "Russian bloc" at the last free elections to be held in Crimea.
You claim KievRus was the original Russia. Actually its the other way round. Kiev gave birth to what is known as Russia.
Agree with your last 2 paragraphs. But what makes you think Putin, Sechin, Rosenberg et al arent oligarchs? Are they honest businessmen? How much would you value their personal wealth compared with the average Russian, and how did they become so rich so quickly?

[firtashia] 04/6/2015 11:54

Loganair, re your comment 359- personally I think the UK is more politically divided than Ukraine. More people in Scotland support Scottish independence than Crimeans or Donbassians who support union with Russia. Ukraine will break up as per your suggestion only if Russia chooses to further invade the areas you refer to, or if the EU blackmail the Ukrainian government into accepting partition, for the sake of European peace, a la Munich 1938. If the Ukrainian people have a say in their own affairs then partition simply will not happen. I presume your idea of partition is based on the simplistic distinction betwen the Russophones of the east and south, and the Ukrainophones of the centre and west. Which language do you think is predominantly spoken in the Ukrainian capital Kyiv? Almost all people in Ukraine understand both languages but prefer to speak one. Conversations between a Ukrainian speaker and a Russian speaker are commonplace. Putin has called Ukraine hopelessly wrong over the past 12 years, but he is wiping the diplomatic floor with the ignorant public schoolboys,appeasers and greedy businessmen of the EU, who have no values except the value of money.

[loganair] 04/6/2015 11:25

Russia Central Bank Wants to Boost Gold, FX Reserves to $500B in Few Years:

The Bank of Russia plans to boost its depleted international reserves to $500 billion to hedge the crisis-struck economy against capital flight and new shocks, Elvira Nabiullina the Central Banks Governor said Thursday.

Speaking at a banking conference, Elvira Nabiullina said the current level of Russia’s reserves look sufficient but the country would need coffers big enough to cover possible “substantial capital outflows over two or three years.”

average level of the past five years, Mrs Nabiullina said.

“The current economic indicators are better than economists had expected. But it’s too premature to say that all the crisis developments are behind… One should not bet that exports will pull the economy [out of the crisis],” Mrs Nabiullina.

In what seemed to contrast with claims that the foreign-exchange crisis was overblown by government officials, Mrs Nabiullina warned the shortfall in reserves could be between $150 billion and $170 billion in 2015 compared with a year ago due to lower exports.

The central bank’s governor also said interest rates will move lower but the pace of cuts would be gradual to avoid destabilizing the ruble and stoking inflation. The central bank will next meet on rates on June 15.

[loganair] 04/6/2015 09:48

Russian stocks, however, dropped sharply after Tuesday's bounce, mainly on reports that the Minsk Agreement had been violated by both sides in the Ukrainian conflict. The RTS index ended yesterday's volatile trading session down 2.7% at 947.

Personally I do not think the Ukraine crises will end until the country breaks 60/40 as with Serbia and Croatia, both pieces do not really mix well together.

The 40%, or bottom half of Ukraine joins up with Transnistria part of Moldova which is already a de-facto independent state.

The rest of Moldova then joins up to become part of Romania as they're basically ethnic Romanians.

In my opinion Russia is not interested in the Baltic States as historically Estonia and Latvia have never been part of Russia. Estonia has historically been part of Denmark then Sweden while Latvia part of Poland then Sweden.

[loganair] 03/6/2015 09:21

Russia's May services PMI just came in at 52.8 which mean expansion, above April's 50.7 reading and well above the 48.3 consensus estimate.

[loganair] 03/6/2015 09:20

Slovakia sees new route for Turkish Stream gas which against the wishes of the USA Greece signed up to yesterday. Slovakia’s Prime Minister Robert Fico has suggested to his Russian counterpart Dmitry Medvedev that the new pipeline system Eastring be connected to Gazprom’s (GAZP RX – Hold) proposed Turkish Stream pipeline. Eastring, with a capacity of 20 bcm per annum, is supposed to link Bulgaria, Romania, Hungary and Slovakia in 2018.