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[loganair] 01/2/2017 11:19

The Russian economy could double over the next two decades if the Kremlin sticks to reforms, according to former finance minister and now President Putin’s economic adviser Aleksey Kudrin.

If the Russian economy continues to expand naturally, it will grow 150 percent by 2035 instead of a possible 200 percent, said Kudrin during the Gaidar international economic forum in Moscow on Friday.

"It is tough to reach this growth rate. The same task was crucial five to seven years ago, but so far it has not been implemented," said the former finance minister. Kudrin is now working for the Kremlin in an unofficial capacity developing an economic plan for Russia in competition with other independent economists.

According to him, inflation in Russia in the medium term should be reduced to 2-2.5 percent. "Speaking of monetary policy, we need to keep inflation below four percent, below the three-year set goal [by the Central Bank of Russia]. But even in the medium term, we have to go down to 2-2.5 percent. This cuts the costs of financial resources in the country, thus creating the basis for long-term money," said Kudrin.

He added that the technological gap remains the most serious challenge for the Russian economy in the next 10-15 years. "This means the reduction in our technical capacity and a decline in living standards of citizens because we will lose markets," Kudrin added.

"In the last five to seven years, state spending on education and healthcare has stagnated or decreased. We, therefore, do not solve the task of building a new economy, we need a budget maneuver here," said the economist.

Kudrin was asked whether sanctions against Russia could be canceled under Donald Trump’s presidency. The economist answered that Washington is unlikely to do that, while such a move from the European Union is possible.

[loganair] 01/2/2017 11:14

The decline of Russia's GDP through 2016 totaled 0.6 percent year-on-year, according to report of the Ministry of Economic Development.

The economic contraction came after revised GDP growth of 0.9 percent in November according to ministry data.

Russia's economy is gradually emerging from a deep slump prompted by weak global oil prices and compounded by Western sanctions over the Ukraine conflict.

The Russian economy is expected to grow by up to two percent this year, Russian Economic Development Minister Maxim Oreshkin.

“The economy has been recovering since last year. In 2017 we are expecting wide growth and investments in all areas,” he said.

The ruble and ruble assets have been among the strongest over the last two years, and focus is currently shifting toward investment in the Russian economy, said the minister.

“We are working with all investment sources. Such an approach gives us the best possible opportunity to achieve results. We are hopeful that the growth rate will continue to rise,” he added.

Russia is pursuing an optimal strategy of diversifying work with Western and Eastern investors, according to Oreshkin.

“We have some structural constraints: these are demographic issues as well as export limitations. We are working on this right now and adopting special measures,” he said.

[loganair] 01/2/2017 11:06

In economic terms, Russia is now at a fork in the road. Alexei Kudrin, the former Finance Minister who retains some influence as an adviser to Putin, has proposed a reform plan designed to achieve average growth rates of 4 per cent through an expansion of the private sector. Central to Kudrin’s vision is the creation of a judicial system capable of defending property rights. A rival plan supported by prominent conservatives calls for higher borrowing to fund state spending without any serious structural reform. As long as Russian businesses feel the need to outsource the rule of law to foreign courts in the absence of a better domestic alternative, there will be a cap on growth and Russia will be unable to recover its status as an emerging nation. It is Russia’s capacity to change from within, not the issue of sanctions, that will determine its economic prospects.

[loganair] 30/1/2017 10:12

In December 2016, the industrial production growth in Russia amounted to 3.2% YOY, which exceeded indicator of the previous month and is the best result since January 2015.

In December, the business activity in the Russian manufacturing industry increased. Markit Russia Manufacturing PMI reached 69-month peak, amounting to 53.7. Markit research also indicated maximum employment growth in the industry over the past five and a half years.

Business activity in Russia's service sector also rose to record levels in December. Markit Russia Services PMI rose to 49-month high, amounting to 56.5. The jobs are not being cut in this sector, which is already a good result.

[killing_time] 20/1/2017 20:41

Ex div date 9/02/2017 = 8p.

[loganair] 19/1/2017 17:20

Russian Prime Minister Dmitry Medvedev stated that Russian economy will move from the adaptation to external risks to its lifting toward a path of sustainable growth.

The Russian economy faces the trajectory of sustained growth in the coming months after enduring the period of adapting to external shocks, Russian Prime Minister Dmitry Medvedev said today.

[loganair] 18/1/2017 16:16

On inflation and GDP

Russia’s Economic Development Ministry considers the 4% inflation target for 2017 to be attainable:

"I see no serious threats for our inflation target of 4%," he said.

Meanwhile, Chief of the Center for Strategic Research (CSR) and ex-Finance Minister Aleksei Kudrin said that inflation in Russia should slow down to 2-2.5% over mid-term.

"The key element of the monetary policy is the goal to keep inflation below 4%. Out today’s target is 4% for the next three years, though we need to lower it to 2-2.5% over midterm already," he said, adding that this will help "reduce the cost of the country’s resources and provide the basis for long money."

In 2016, inflation amounted to 5.4% in annual terms. The Central Bank’s key inflation goal till the end of this year within its inflation targeting policy is 4%.

Russia’s GDP growth will exceed 1% in the first half of this year:

"The Economic Development Ministry’s official outlook for this year is 0.6% [GDP] growth. We expect 2017 growth to be greater than forecasted. In the second half of 2017 [GDP] growth may exceed 2%, which means that it may be higher than 1% already in the first half of the year," the minister said.

[loganair] 18/1/2017 15:55

Alerta Roja - I´ve popped over from St Petersburg to the Costa´s in Spain for a little Winter Sunshine and what to I see out of my bedroom window this first morning....2 inches of snow with a further 8 inches forecasted for over night and tomorrow morning.

[loganair] 12/1/2017 17:04

It is necessary to continue to reduce the level of the involvement of the Russian government in the country’s economy and to change the system of state administration, Russian Prime Minister Dmitry Medvedev said today.

"It is necessary to develop competition … to reduce the excessive presence of the government in the economy, to increase the investment attractiveness of the regions themselves and, of course, seriously restructure the system of government," Medvedev said at the Gaidar Forum.

Medvedev also stated that politically motivated barriers for beneficial projects including sanctions generate tensions in the entire world.

“Sharp politicization of international economic relations is an important feature of modern economy which concerns everyone … The strong-arm approach, sanctions which run counter to economic considerations, I’m not even speaking of political motives, but of the fact that they are always harmful to the economy, politically motivated barriers for mutually beneficial projects are constantly generating global tensions nowadays,” Medvedev said at the Gaidar forum.

[loganair] 12/1/2017 16:47

Russia is forecasting growth of 3% for 2019 while I note the World Bank only forecasting 1.8%

I also see for the second year running the Russian Central Bank Governor Elvira Nabiullina has been named as European Central Bank governor of the year and the chief of the IMF, Christine Lagarde lauded Nabiullina for doing “a fantastic job” while tackling the financial problems in Russia, and inflation in particular.

The rouble has hit a high since it crashed a couple of years ago. The Russian currency strengthened to 59.2 against the dollar, also slightly up against the euro at 63.06.

In the last 12 months, the ruble has been the world’s best-performing currency, strengthening 22.59 percent against the dollar. The Russian currency has continued the rally this year, gaining 3.28 percent against the greenback.

The Russian budget relies on oil prices of $40 per barrel and 67.5 rubles for a dollar this year.

The strengthing rouble gives Nabiullina greater scope to ruduce interest rates and at a faster pace.

[luckymouse] 12/1/2017 05:57

Might be time to load up on India (NII,JII) then after the Demonetisation dip

[loganair] 11/1/2017 18:02

Washington should move from viewing Russia as a permanent adversary to a partner at times, Rex Tillerson, nominated to head the State Department under President-elect Donald Trump, said during a hearing of the US Senate Committee on Foreign Relations.

“Russia more than anything wants to establish its role in the global world order,” said Tillerson. “Russia is here, and Russia matters, and they are a force to be dealt with,” he added.

“My experience with the Russians, they are very calculating, they are very strategic in their thinking and they develop a plan,” said Tillerson. The ex-CEO added that Moscow is “judging responses” of other states and “based on the responses they make the next steps.”

[loganair] 11/1/2017 15:49

I am happy we also chat about JBP (Brazil) on this thread has both Brazil and Russia have economies based on Commodities, Oil and Gold.

Moody's international rating agency forecasts that Russia’s GDP will grow by 1% in 2017, according to the agency’s report released today. Moody's forecasts a further rise to 3.0% in 2018.

2017 World Bank GDP Forecasts For Select Emerging Markets:

Brazil: 0.5%

Russia: 1.5%

India: 7.6%

China: 6.5%

[quepassa] 10/1/2017 17:41

Thank you, LuckyMouse.

Fascinating stuff and a lot of food for thought and further research.

Much appreciated.

QP

[its the oxman] 10/1/2017 09:41

Feels like the only way is up here, long may it last.

[quepassa] 07/1/2017 16:24

Hi RB,

Welcome and great to see you here.

We especially like JPB Brazil, JRS on this thread.

Thanks for the heads-up on JAM. I have invested heavily 18 months ago into SMT/Scottish Mortgage which has racked up great gains for a £4bn investment trust but will look also at JAM.- Thanks.

loganair -thanks - fully concur about oil. - in the end OPEC had to come together and do the obvious thing. - nothing like a nice cartel when it's working properly to bolster prices!

KT - any more like VOF?? wow! Please let us know.

QP

[killing_time] 07/1/2017 11:45

This was easy my best investment for last year followed by VOF.

Going forward for 2017 i was looking at www.gurufocus.com and they listed their 2017 market predictions.

1. Russia 33%
2. China 30%
3. Singapore 18%
4. India 16%
5. Brazil 15%

Dont know how good they are but will find out in 12 months time. Every market prediction i have seen for the year coming has Russia way out top because of oil and currency movements.

Please DYOR, all the best KT.

[loganair] 07/1/2017 10:20

My understanding is that the mandate to buy back shares has to be renewed every year.

Russia and Brazil are still in the top 10 cheapest stock markets in the world.

I see the forecast high for oil during 2017 has now climbed to $65 per bbl which bodes well for the Russian market.

[r ball] 07/1/2017 08:06

quepassaHello. We meet again. This one has potential as has JAM and RCP. All opinion of course.Kind regards

[davegk] 06/1/2017 15:33

Today’s Money Week magazine has an article about the attractions of investing in the Russian market. It points out that even after returning 30% in rouble terms (and more than 50% in dollar terms) in calendar 2016, the Russian market trades at a multiple of only 7.5 times current-year earnings and the macro economic output is improving, this being helped by the recovery in the oil price.
The corporate sector is in a strong position with most companies not indebted and having strong cash flow. The market yields 4% on 2016 payouts and over 7% for 2017.

Their recommended fund to take advantage of all this is JRS.

[galeforce1] 04/1/2017 18:34

Logan

My reading of today's RNS is that the board will request a new mandate at the AGM on 7 March. This will give the trust the authority to buy up to 20% of its own shares, which they can buy anywhere below a 2% discount to NAV. This sounds like a sensible way of managing the excessive discount. Many trusts, like SMT, do the same thing. In the case of SMT the trust has power to issue new shares to reduce the premium.

But you are the expert on JRS. If you say that this power has always existed then I'm sure you're correct.