Jpmorgan Russian Securit... Share Discussion Threads

[loganair] 22/3/2016 09:00

The Russian market erased most of its early losses by the close after the oil price bounced and the ruble returned beyond the RUB68/$ level. The RTS Index closed only 0.17% lower after trading 1.6% down intraday. The ruble strengthened despite another portion of weak Russian economy data. Rosstat reported yesterday that disposable income in Russia fell 6.9% YoY in February (0.8 ppt more than the Bloomberg consensus expected) while retail sales declined 5.9% YoY during the period, reflecting the risks for the retail sector. Russian retailers underperformed the market yesterday as Lenta GDRs lost 4.3% and Magnit fell 0.7%. X5 receipts lost 1.6% as a strong operating performance was hurt by unexpected expenses due to a management incentive program.

[loganair] 17/3/2016 10:26

Export growth to key markets remains strong YTD. According to Gazprom (JRS 2nd Largest Investment) CEO Alexei Miller, the company exported 36.5 bcm of natural gas to non-FSU countries in the period from 1 January to 15 March 2016, up 33.5%. Exports to Germany accounted for 27% of non-FSU exports at 9.9 bcm, increasing 37% YoY.



As Germany starts to rundown and close their nuclear power stations they´ll need more and more gas which will come from Russia and is why a second gas pipeline is being built under the Baltic sea to supply this must needed extra gas.

[quepassa] 16/3/2016 18:15

Loganair,

fair enough.

keep posting the good stuff.

there is of course already as much detailed economic info on Russia widely available on the web as one could ever want. so I guess no harm in adding more here.

good luck. i shall no longer contribute

regards,

qp

[jimcar] 16/3/2016 13:41

Just read that monks IT have bought into Sberbank so maybe an indication that Russia is getting more acceptable to investors.

[loganair] 16/3/2016 09:30

QuePassa - This thread I use to post information which is specific to JRS, especially their top 12 Largest Investments and how they are doing while the thread I opened was for Investing in Russia generally and not necessarily JRS specific.

The problem with Chatty is I have an ´inability´ to do chatty.

[quepassa] 16/3/2016 09:13

Hi loganair,

You post some very good stuff and excellent technical-economic information.

It can be quite a heavy diet though.

I wonder whether it might be an idea to keep the other thread for detailed technical info and this thread for a more informal chatty thread?

Regards,

QP

[loganair] 16/3/2016 08:55

Higher NIM in 1H16 and C/I of 40% promised for this year. Sberbank (SBER RX – Buy) (JRS Largest Investment) reported 4Q15 IFRS results yesterday. Net income was almost in line with the consensus. NIM added 20 bps QoQ, and management guided another two quarters of growth, again mainly thanks to cheaper funding. Net fees were about 10% short of expectations, posting 13% YoY growth for the full year; for 2016, fee income growth is targeted in the high-teens. Costs were 5% higher than the market assumed, but with full year C/I staying almost flat (43.6% vs 43.4% for 2014), as promised. Sberbank CEO German Gref was present at the conference call and promised 40% C/I for this year, which is optimistic compared to the street. Earlier, management guided simply a YoY improvement in C/I. Gref did not disclose details of the planned optimization though.

[quepassa] 14/3/2016 09:58

Dividends just credited.

VERY VERY nice yield.

With commodities on the uptick, maybe things have bottomed on Russia equities.


When others are fearful, be greedy.........


ALL IMO. DYOR.
QP

[loganair] 12/3/2016 10:04

mining.com - Crumbling U.S empire drives Russia & China to move into gold:

Central bankers have been on a massive Gold Buying Spree led by Russia and China. One must remember that not only is Putin ex-KGB, but he is also an economist and holds a black belt in judo. Judo teaches you to use your opponent’s momentum to defeat him or her, and that appears to what Putin is doing. He has this administration running circles, by the time they figure out what he is up to, it is too late to do anything. Putin and China can see that the writing is on the wall that the days of U.S holding the top spot are numbered. Our economy is in shambles and only appears to look strong because of the hot money that is holding it up. Regarding illusions, it is a perfect illusion and for now, the masses have bought it, but Russia and China have not.

Putin is also aware that the average life span of a super power is 250 years, and the U.S has been in this position for 240 years, so it is running out of time. Hence, he is using the strong dollar to buy up cheap, valuable Gold. Russians are advanced chess players they plan several moves ahead; that is why the West has had such a hard time figuring out what Putin’s next move will be. When the western media states that Russia’s reserves are falling, they forget to mention that the reserves are in dollars and what Russia and China are doing are getting rid of their worthless dollars and replacing them with Gold.

IMF data (International Monetary Fund) shows that the Russia and China have been among the biggest net buyers of Gold for eight years in a row. Last year countries purchases close to 590 tons of Gold accounting for 14% of annual global gold bullion demand. Smart nations like Russia and China are using these low prices to load up on Gold and divest from the dollar. They understand that this economic illusion can last for only so long before reality strikes.

Russia’s reserves of Gold have soared over the years. Putin is planning for a day when the U.S is not the dominant power anymore. When the dollar is finally dethroned, the end will not be pretty.

The number of bilateral deals bypassing the dollar continues to soar. The opening of the AIB (Asian infrastructure bank) and with the Yuan being accepted into the world reserve currency club, the path for the dollar is definitely downhill.

Game Plan:

Both China and Russia make for great long-term investments. In Russia YNDX and VIP are examples of two good companies investors can open positions in; in China, we have BABA, CHL, HNP, etc. Most importantly, it would be prudent to hold a position in Gold bullion. You can use declines to open new positions. We would not aggressively jump into Gold bullion unless you have a lot of extra cash lying around that is not being used. Gold is still not fully out of the woods yet as the trend has not turned positive yet. It has a solid wall of resistance to overcome at $1350. The monthly close above $1200 is a move in the right direction.

The U.S can either embrace this new trend or be crushed by it. Once a trend is in motion, there is nothing that can stop it; the best you can hope to do is to slow it down. Sadly that is the current path the U.S has opted for; perhaps the next administration will be wiser.

[loganair] 12/3/2016 10:03

mining.com - Crumbling U.S empire drives Russia & China to move into gold:

Central bankers have been on a massive Gold Buying Spree led by Russia and China. One must remember that not only is Putin ex-KGB, but he is also an economist and holds a black belt in judo. Judo teaches you to use your opponent’s momentum to defeat him or her, and that appears to what Putin is doing. He has this administration running circles, by the time they figure out what he is up to, it is too late to do anything. Putin and China can see that the writing is on the wall that the days of U.S holding the top spot are numbered. Our economy is in shambles and only appears to look strong because of the hot money that is holding it up. Regarding illusions, it is a perfect illusion and for now, the masses have bought it, but Russia and China have not.

Putin is also aware that the average life span of a super power is 250 years, and the U.S has been in this position for 240 years, so it is running out of time. Hence, he is using the strong dollar to buy up cheap, valuable Gold. Russians are advanced chess players they plan several moves ahead; that is why the West has had such a hard time figuring out what Putin’s next move will be. When the western media states that Russia’s reserves are falling, they forget to mention that the reserves are in dollars and what Russia and China are doing are getting rid of their worthless dollars and replacing them with Gold.

IMF data (International Monetary Fund) shows that the Russia and China have been among the biggest net buyers of Gold for eight years in a row. Last year countries purchases close to 590 tons of Gold accounting for 14% of annual global gold bullion demand. Smart nations like Russia and China are using these low prices to load up on Gold and divest from the dollar. They understand that this economic illusion can last for only so long before reality strikes.

Russia’s reserves of Gold have soared over the years. Putin is planning for a day when the U.S is not the dominant power anymore. When the dollar is finally dethroned, the end will not be pretty.

The number of bilateral deals bypassing the dollar continues to soar. The opening of the AIB (Asian infrastructure bank) and with the Yuan being accepted into the world reserve currency club, the path for the dollar is definitely downhill.

Game Plan:

Both China and Russia make for great long-term investments. In Russia YNDX and VIP are examples of two good companies investors can open positions in; in China, we have BABA, CHL, HNP, etc. Most importantly, it would be prudent to hold a position in Gold bullion. You can use declines to open new positions. We would not aggressively jump into Gold bullion unless you have a lot of extra cash lying around that is not being used. Gold is still not fully out of the woods yet as the trend has not turned positive yet. It has a solid wall of resistance to overcome at $1350. The monthly close above $1200 is a move in the right direction.

The U.S can either embrace this new trend or be crushed by it. Once a trend is in motion, there is nothing that can stop it; the best you can hope to do is to slow it down. Sadly that is the current path the U.S has opted for; perhaps the next administration will be wiser.

[chester21] 11/3/2016 14:29

yes she has done goodjob

[loganair] 11/3/2016 09:21

I my good opinion a good deal of this is down to Russia´s Central Bank Governor Elvira Nabiullina who has fought very hard for the Central Bank to remain independent of Putin and has steered the banks policies very well.

[quepassa] 11/3/2016 09:09

Dramatic recovery.

Increase in oil will drive a stronger economy.

Looking attractive.

ALL IMO. DYOR.
QP

[loganair] 11/3/2016 09:01

Sales growth improves in February - Revenues in February increase 19.5% YoY, accelerating 4.4 ppt MoM. Yesterday, Magnit (JRS 4th Largest Investment) published trading data for February, which showed an improvement in revenue growth over January. Consolidated revenues rose 19.5% YoY to RUB84.0 bln ($1.1 bln), accelerating 4.4 ppt MoM. This is partially due to a calendar factor (2016 is a leap year) but still good, particularly as inflation was slowing in February, and compares well with January when revenue growth was decelerating. Sales growth at convenience stores, the company’s key segment, reached 18.0% YoY to RUB61.65 bln ($0.8 bln). Sales at Magnit’s hypermarkets division rose 4.4% YoY to RUB13.0 bln ($168 mln), and at the Magnit family segment sales 44.7% YoY to RUB4.5 bln ($58 mln). Revenues in the cosmetics segment increased 93.8% YoY to RUB4.8 bln ($62 mln).

Magnit was among the market leaders yesterday as its GDRs soared 6.6% on the back of the February trading update.

[svetz] 05/3/2016 00:56

I believe this is a classic buy....when everyone else is selling, or sold

[rupe1958] 04/3/2016 19:15

Loganair - thanks for that. I've bought this afternoon partly because I've never bought an investment trust with a discount of 15% or more and not made money. The discount always returns to around 10% when sentiment becomes more positive on the sector.
I also feel that the oil price trend is supportive, and that the Syrian situation may provide Russia with the leverage to get the sanctions lifted or at least eased.

[loganair] 04/3/2016 16:35

The cost of living in Russia fell sharply last month as the impact of the 2014 crisis in the country's currency continued to be washed out of the system, possibly eliminating the need for further central bank interest rate hikes. Russia's consumer price index fell back to a 8.1% year-on-year pace in February, down from the prior month's advance of 9.8% (consensus: 8.5%).

Nonetheless, CPI remained within the Russian monetary authority's own forecast range of between 8-8.5%.

The 'core' rate of inflation, which strips out the typically more volatile categories such as food and oil, decreased from a 10.7% year-on-year clip to 8.9% - the lowest rate in over a year.

Food price inflation fell from 9.2% in January to 6.4%, that in non-food goods from 10.9% to 9.5% and for the service sector from 9.0% to 8.5%.

Friday's price data came alongside figures released recently by the monetary authority in Moscow revealing that inflation expectations had edged lower and 4% appreciation in the ruble's value versus the US dollar, Liza Ermolenko, emerging markets economist at Capital Economics, said in a research report sent to clients.

"All of this means that the rate hikes, which the CBR hinted at during the last MPC meeting in January, are now off the cards," Ermolenko added.

Nonetheless, policymakers would retain an extremely cautious stance, with Central Bank of Russia rate-setters having highlighted that risks to the outlook for inflation in the Russian Federation were still large.

"As a result, we think that interest rate cuts are only likely to come towards the end of the year and will probably be modest," the economist added.

[loganair] 04/3/2016 16:06

Currently JRS stands on a discount of slightly above 17% and has a yield of around 5.5%.

[rupe1958] 04/3/2016 14:30

This has to be on a 20% discount at this point. If the oil price continues up that discount should contract.

But the spread is huge. About 3%. Is it always this big?

[firtashia] 03/3/2016 11:39

Very well written article on Kadyrov and how he uses his influence over central government to secure finances for his republic.

[loganair] 03/3/2016 10:54

31st January 2016 - Portfolio analysis by JP Morgan:

The Trust underperformed the market in January. Stock selection was weakest in the energy sector, with Tatneft and Surgutneftgas as key detractors, along with the underweight in Lukoil. Our lack of exposure to VTB, the second largest banking group in Russia, contributed positively to performance. Turnover in the portfolio was low in January. We reduced our exposure in Norilsk Nickel, a nickel mining and smelting company, and invested the proceeds into Gazprom. We used the Gazprom's underperformance and low valuation as a buying opportunity. Russia stands out as the cheapest emerging market, with a price-earnings ratio below five and below its dividend yield. We continue to take advantage of pull-backs to add to preferred names in this market, as we believe the negatives are well known and largely priced in.

[knowing] 03/3/2016 09:45

MOSCOW--Russia's services sector activity returned to growth in February because of an increase in new orders, the Markit survey of purchasing managers showed Thursday.

The headline Purchasing Managers' Index for the services sector rose to 50.9 in February from 47.1 in January, climbing above the 50 level that separates growth from contraction.

[loganair] 03/3/2016 09:16

Rapid YoY growth continues - Moscow Exchange (JRS 6th Largest Investment) published trading volumes for February yesterday with the money market leading the way this time (up 10% MoM). Bonds and derivatives also performed well rising a respective 2% MoM and 8% MoM (the latter also by 7% MoM in terms of contracts traded).

Both EBITDA and net income were up 10% QoQ, each beating the consensus by 18%. Fee income topped the consensus by 2% and rose 13% QoQ, the growth primarily coming from bonds, the money market and the depositary & settlement segments. For 2015, FX and the money market brought the most rapid growth (27% and 20%, respectively). Net interest income rose 16% QoQ, beating the consensus by as much as 29%; the effective yield rose 80 bps QoQ to 3.2%; some one-off gains from several Treasury deals, already seen in 3Q15, continued into 4Q15 (management assumes they will not be repeated in the future).

[loganair] 02/3/2016 08:53

Rally in Russian equities continues. The Russian market opened with a jump yesterday pushed by stronger oil prices and a firm ruble. Brent exceeded $37/bbl intraday to reach an eight-week high. Although the news from President Vladimir Putin's meeting with top management from major Russian oil companies dampened market hopes of a reduction in oil output by domestic producers, Brent managed to stay well above $36/bbl. Russia is not going to cut oil output, but is ready to maintain it at January levels, according to Energy Minister Alexander Novak in comments following the meeting. The RTS Index ended the day with a 2.3% gain.