Jpmorgan Russian Securit... Share Discussion Threads

[andyj] 28/3/2018 15:48

Finally the spread narrows and the price falls. There is risk here, with sanctions looming, but the growth potential is compelling and with a stable, popular government and high oil prices the trajectory is going to be upwards.

[loganair] 26/3/2018 10:42

Crude oil prices rose to their highest level in over three years after yuan-backed crude oil futures debuted strongly on the Shanghai exchange.

North Sea Brent Crude surged above $71 per barrel for the first time since 2015.

China surpassed the US to become the world’s largest importer of crude in 2017...so naturally, China would want to play a more active role in influencing the price of crude oil.

Analysts have noted that the launch of the petro-yuan could shatter the petro-dollar’s dominance of the crude oil market.

[loganair] 24/3/2018 11:11

Great expectations by Marina Gerner:

So what is the outlook for the BRICS? Stammers says that, ultimately, China and India are looking to become leading global providers of goods and services, so they make things. In contrast, Russia and Brazil are expected to become the global giants in commodities, so they provide the basic raw materials needed to make those things.

Paul McNamara, an investment director and lead manager on emerging market bond, currency and hedge fund strategies at GAM, says: ‘China and India matter a lot; the other two are secondary.’ All the BRICS countries face different obstacles. ‘Russia is crippled by dysfunctional institutions and corruption, but Brazil is slightly better off,’ comments McNamara. Redwood says Russia has ‘suffered a setback from the lower oil price, which has hit its export earnings and tax revenues, and from Western actions, which have made some trade and transactions more difficult’.

Redwood observes that Brazil has been through a bad political and economic crisis, with recession, high inflation and difficult corruption problems forcing changes of government. He says: ‘There is now some hope of recovery, but there remain deep-seated economic and political problems to resolve fully.’ South Africa too has been suffering from political instability and failing economic policies. ‘Future sustained progress in both Brazil and South Africa will need stable reform-oriented governments that can shake off the problems of the past,’ he adds.

India has become the poster child for reform-led recovery in emerging markets, argues James Penny, senior investment manager at TAM Asset Management. ‘With the appointment of prime minster Modi, the country has been put on a path of steep and deep economic and government reform to bring its economy and vast middle-class population to the forefront in the modern market.’

‘India has scope to become one of the world’s largest economies, but it still has a lot further to go to increase incomes per head.’ Moreover, South Africa, Russia and to some extent Brazil rely on mining and the production of oil and commodities, whereas China and India are more dependent on imports of raw materials.

Dominant China:

However, Penny says the biggest and, on the global stage, the loudest of the BRICS nations remains China. The country continues to make headlines speculating about whether its economy could suffer a ‘hard landing’ in the face of its highly leveraged corporate sector and a fall in GDP to 6 per cent. But he is keen to put these figures in context: ‘Let’s be clear here,’ he says. ‘The US is struggling to find 4 per cent GDP growth, the UK is looking at 1.5 per cent, and the world is worrying about a Chinese slowdown to 6 per cent GDP growth?’

-China, not India, will dominate future Asian growth:

The growth rates of the BRICS economies, with the possible exception of India’s, over the next 10 years is likely to be about half that of the previous decade, according to Smith. India’s and China’s shares of global GDP growth will probably be smaller, but the countries will remain dominant.

‘China will remain the largest [BRICS] economy and should continue to command investors’ attention,’ he says. ‘But if India opens up and reforms, investors should begin to devote more of their attention to the subcontinent.’ That said, he points out that, given the relative size of the two economies today, it would still take more than 30 years for India’s GDP to exceed China’s, even if India achieves all its reform goals and China achieves few of its aims.

Ultimately, the strength of the BRICS as an investment proposition is their very diversity, argues Ballard. ‘They are so different that they provide an element of diversification beneficial for any long term investor.’

[loganair] 20/3/2018 13:29

The volume of trade between Russia and China increased by more than 20 percent last year and is still growing, according to Chinese Prime Minister Li Keqiang.

“We believe that Sino-Russian cooperation in the business sector has huge untapped potential. Trade turnover between our two big economies is currently about $80 billion,” said the head of the government during a press conference in Beijing. He expressed confidence that the trade volume could grow to $100 billion soon.

The prime minister explained that the current situation on the global raw materials market and with world trade as a whole had a negative effect on the two countries’ trade cooperation. Despite that, trade volume between Russia and China has increased by 20.8 percent year-on-year, reaching $84.07 billion in 2017.

In 2017, Chinese exports to Russia grew by 14.8 percent, to $42.88 billion; according to data from China’s General Administration of Customs. Chinese imports of Russian goods increased by almost 28 percent, to more than $40 billion. In December alone, trade turnover between the two nations stood at $8.13 billion.

The sides have been steadily expanding economic cooperation and will make additional efforts to increase trade to $200 billion in the coming years, said Russian Prime Minister Dmitry Medvedev. He added that preferential trade rules between the countries are being considered, which would increase the use of the ruble and yuan in settlements.

[loganair] 17/3/2018 09:09

HS2 - 20 years of looking into this project and not a foot of track has been laid and will now cost £50bln.

From planing to being up and running Russia built their high speed train from Moscow to St Petersburg in 3 years and now plan to build a high speed train between Moscow and Kazan. The 770Km (470 miles) will cost $15bln (£11.5bln) which includes €2.7bln for the rolling stock being built in Germany - as the Russians keep saying "sanctions...what sanctions!

Airports - 40 years what are we going to do when it comes to the London airports, in the mean time over the past 10 years, St Petersburg and all 3 Moscow airports have been completely rebuilt and a 4th Moscow airport just coming on line.


It seems to me that Putin is loving the UK government at the moment, because of the threat of ceasing the assets of Russian Oligarchs. The UK Government by giving advanced warning has so far this year allowed these Oligarchs to bring home to Russia £20bln from the UK to be invested in Russia.

[loganair] 16/3/2018 22:05

Inflation in Russia now stands at 2.18 percent, and for the first time ever it is lower than US inflation, which is currently 2.2 percent. This is another record low for Russia. In 2017, consumer prices rose by only 2.5 percent. In 2016, there was 5.4 percent growth. Thus, inflation has more than halved in a matter of a couple of years.

Such low inflation is unprecedented for Russia. For almost a quarter of a century the economy has lived through much higher rates of consumer prices growth. In the 1990s there was hyperinflation typical for the poorest countries: 2,509 percent in 1992, 840 percent in 1993, and 215 percent in 1994.

“Low inflation benefits producers: at stable prices, they do not have to reconsider costs, and the cost of production does not change,” said Anna Kokoreva, deputy director of the analytical department of Alpari.

[loganair] 15/3/2018 13:37

I have heard the following - When looking at stocks, just look at their earnings and not at the geo-politics that is causing investors to be either Bearish or Bullish.

[loganair] 15/3/2018 09:14

QP - May very well do so, this is why the chap from UBS said what he said - the fundamentals of investing in Russia are very good, however the Sentiment is very poor.

Also mentioned that Russia needs to make better use of its domestic fundamentals.

[quepassa] 15/3/2018 09:12

price comprises two things:

1. NAV (625p)
2. discount/premium based on investor appetite and market sentiment.



Current Price 515p. Current Discount-to-NAV 17.5%
Price on 31st Jan was 555p with NAV of 626p giving a discount-to-NAV of 11%.

Discount has ballooned rapidly from 11% to 17.5%.



Any views please as to whether current events may further weaken investor sentiment in JRS and further widen discount and impact share price negatively?


ALL IMO. DYOR.
QP

[joe say] 15/3/2018 08:46

Let's hope he didn't garnish that information over a cup of tea, eh?

[loganair] 15/3/2018 08:33

UBS head of EM Asset Strategy:

Economy of Russia is very good.

Russian assets are cheap.

Very independent Central Bank which is intervening to stop the Rouble from strengthening too much to trade in the 55 to 60 against the US dollar.

Russia’s FX reserves reached $455.2 billion on 9th March a high not seen since September 2014. 18 months ago the Central Bank announced with in 3 years they wanted to bring Russia's FX reserves back up to $500 billion from the $350 billion it had fallen to. It is highly likely the Central Bank will reach its target before the year end, a full year ahead of schedule. Russia's FX reserves peaked at $545 billion in August 2011.

[loganair] 15/3/2018 08:32

UBS head of EM Asset Strategy:

Economy of Russia is very good.

Russian assets are cheap.

Very independent Central Bank which is intervening to stop the Rouble from strengthening too much to trade in the 55 to 60 against the US dollar.

[loganair] 12/3/2018 15:00

Chinese state-controlled Huarong Asset Management has bought a 36.2 percent stake in the unit of CEFC China Energy through which CEFC is acquiring a $9.1 billion stake in Russian oil giant Rosneft (JRS 5th Largest Investment).

In September, CEFC Energy announced plans to acquire 14.16 percent of Rosneft shares from Glencore and the Qatar Investment Authority (QIA).

“The final structure of Rosneft's shareholders has been formed,” Rosneft CEO Igor Sechin told Rossiya 24 television.

As part of a long-term agreement, Rosneft and CEFC Energy inked a deal on crude oil deliveries in 2017. According to the agreement, the Russian oil major will supply CEFC with 60.8 million tons of oil annually until 2023.

The agreement covers the development of exploration and production projects in Siberia. The two companies plan to cooperate in refining, petrochemicals and crude trading.

According to the Russian producer, the deal will increase direct supplies of crude oil to the “strategic Chinese market and ensure a guaranteed cost-efficient export channel for the company's crude sales.”

AND

Considering all the trade tariffs the US are bandying about JRS has bought into Novolitetks Iron and Steel to make it their 10th Largest Investment.

[galeforce1] 08/3/2018 16:17

Anybody think JRS could be hit in some way by UK sanctions against Russia following the Salisbury affair?

Of course there is absolutely nothing meaningful the UK Govt can do against Russia.
Post-Brexit, we are unable to influence the EU to tighten sanctions, which is what would count. Just the UK imposing sanctions on our won will damage just ourselves. But we do have a bit of a taste for that kind of thing (what is Brexit other than wilful self-harm).

I guess we'll close the RT Channel (which I personally like) send back some diplomats. But could we go further, and do something silly like ban all UK investments in Russia?

[loganair] 05/3/2018 21:29

I have just been listening to the head of strategy at UBS and he says his favourite markets for 2018 are Russia, Brazil, South Korea and Indonesia.

[quepassa] 27/2/2018 15:32

Great info and updates.

Thanks. It continues to be appreciated

QP

[loganair] 27/2/2018 13:03

Russia now says it expects the American sanctions on it to be for ever and that this anti Russia is keeping the US frozen in time.

It seems that the US sanctions are hurting the US more than Russia.

Also being reported that Russia is becoming the world's bread basket with wheat exports feeding half the planet as Russia has now over taken the US in becoming the world's biggest exporter of grain.

[loganair] 27/2/2018 12:56

Russian bank Sberbank (By far JRS Largest Holding) has become the richest bank in continental Europe.

The bank has more than 127 million retail customers in Russia and 10 million abroad, as well as 1.1 million corporate clients in 22 countries. Sberbank became Russia’s most valued company last year, leaving energy giants Gazprom and Rosneft behind.

[loganair] 25/2/2018 12:22

Norilsk Nickel (JRS 5th Largest Investment) - The price of Cobalt has tripled in the past 18 months.

Norilsk is mostly a nickel-copper-palladium (& platinum) miner. However, it is also a significant global cobalt producer (~5,500 tonnes in 2017) with an ability to increase production of cobalt. Added to that, it is exceptionally well valued on a 2018 P/E of 9.2 and a 2018 estimated dividend yield of 10.6%.

[loganair] 25/2/2018 12:19

Norilsk Nickel (JRS 5th Largest Investment) - The price of Cobalt has tripled in the past 18 months.

Norilsk is mostly a nickel-copper-palladium (& platinum) miner. However, it is also a significant global cobalt producer (~5,500 tonnes in 2017) with an ability to increase production of cobalt. Added to that, it is exceptionally well valued on a 2018 P/E of 9.2 and a 2018 estimated dividend yield of 10.6%.

[loganair] 14/2/2018 20:07

Since the start of the OPEC-Russia production cut deal, Russia’s oil companies and government have received the equivalent of around $41.5 billion more in proceeds, thanks to the higher oil prices.

Due to the higher oil prices as a result of the pact, Russia’s federal budget has received so far $29.41 billion (1.7 trillion rubles) more, Russian Energy Minister Alexander Novak said on Tuesday. The oil companies - a combined $12.11 billion (700 billion rubles) more since the beginning of 2017.

The higher revenues are the result of the $15-$20 increase in oil prices, compared to the price of oil before the deal between OPEC and a dozen non-OPEC nations led by Russia was signed, the minister said.

[hazl] 10/2/2018 19:19

Thanks as ever logonair.
I read with interest.
Also read the year old article above and wondered what your take was on the current situation with the Shanghai exchange and the implications for the gold price.
Judging by the following link it still seems quite restricted.
I note also that Caitlin Long seems more interested in Cryptocurrencies these days.



Imo

[quepassa] 10/2/2018 15:59

Thanks. I am invested in both also.
I have a large holding in JPB and a modest holding in JRS and similarly like to buy the dips.

Cheers.

QP

[loganair] 10/2/2018 11:11

I buy every time JRS dips below 500p otherwise I put my money into JPB (JP Morgan's Brazil Investment Trust)

JRS makes up around 30% of my Investment Trust portfolio.