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[loganair] 10/4/2017 10:01

I note how just two companies, City of London Asset Management and Lazard combined now own 50% of JRS.

[loganair] 10/4/2017 09:45

Russia’s economic growth will depend on the actions of the government in the nearest future, Economic Development Minister Maksim Oreshkin said.

"As for 2018, 2019 and 2020, the (economic) growth will only depend on our actions, on how fast we proceed with reforms, and it will be high if changes happen," he said, adding that the Russian economy "has already reached a new stage of economic cycle and is on the rise."

Oreshkin said earlier that as the economy had adjusted to the new environment growth is expected in more sectors in 2017 compared with last year. The official outlook of Russia’s Economic Development Minister for this year implies a 0.6% GDP growth. Oreshkin said earlier that he expects a stronger growth for 2017. In the second half of this year, GDP growth will exceed 2%, which means it will be higher than 1% in the first half of 2017, the Minister said.

Finance Minister Anton Siluanov expects the country’s economic growth to reach 1.1-2% in 2017 instead of the officially forecasted 0.6%.

Russia’s GDP contraction amounted to 0.2% in 2016 compared with 2015.

[loganair] 07/4/2017 09:46

In my opinion it is better that the gold buying is in the hands of the central bank as it is independent of the president and the Russian Government, especially as the Central Bank Govenor has steered the Russian finances so well through rapids of the Russian recession of the past couple of years and how she is so well respected amongst the international financial community.

[loganair] 05/4/2017 10:01

Oil prices of $60 per barrel compared to the original budget forecast of only $40 per barrel will contribute only 1 percentage point to Russia's GDP growth, signifying the economy's low dependence on oil, Governor of the Bank of Russia Elvira Nabiullina said Wednesday.

The average price for the Urals blend of crude was $52.26 per barrel in the period of February 15 — March 14, according to the Russian Finance Ministry.

Russia’s economic growth rates will stabilize at the level of 1.5-2% even if the oil price goes down, Central Bank Chief Elvira Nabiullina said Wednesday. "The potential economic growth (rates) amount to 1.5-2% if there are no structural transformations.

Whatever the price of oil, without structural transformation we’ll stabilize at the economic growth level of 1.5-2%," she said.

[loganair] 03/4/2017 10:40

By ELENA HOLODNY:

Russia has finally returned to growth.

The economy grew by 0.3% year-over-year in the fourth quarter of 2016 after shrinking by 0.4% in the third, according to the Federal Statistics Service.

This marks the first time Russia has seen positive growth in year-over-year terms since the fourth quarter of 2014.

The Russian economy contracted by 0.2% over the full year.

Looking beneath the headline figure, the improvement was due to the recent lighter declines in consumer spending and stronger inventory investment, said William Jackson, senior emerging markets economist, at Capital Economics, in a note.

“These trends are likely to continue in the coming quarters and we expect growth to be stronger than most anticipate both this year and next,” he added.

[loganair] 30/3/2017 10:06

The good, the bad and the Donald: Countries to buy and avoid when it comes to the emerging markets By Jonathan Jones.

Brazil and Russia should be on investor’s radars while Venezuela and Ukraine should be avoided within emerging markets as well as China and Mexico because of the Donald.

“If we are to believe Trump and his renewed friendship with Russia I think Russia becomes a country that you want to be invested in,” the manager said.

“For ourselves we’ve got a lot of exposure to Russian corporates and have done since 2015/2016 and the reason behind that is in a perverse way the sanctions put in place have actually helped the Russian corporates.”

Sanctions were placed on Russian exports and visas following the threat to Ukraine’s sovereignty in 2014, with western powers including the US and the European Union imposing bans.

“As a result, when companies have come to market they’ve had to raise cash and de-lever so Russian corporates have got some of the lowest leverage out there and they’re cashflow positive. So there is no pressure on them to come to market to refinance,” Lad said.

Indeed, while Russian equities have slipped back of late they are among the top performers since Trump was elected, 13 per cent higher since 8 November last year.

The other country he likes is Brazil, which the manager began to invest in at the tail end of 2015 and is an example of looking at top-down and bottom-up fundamentals.

Lad said: “Brazilian politics and economics all look pretty weak so the top-down investor probably says they wouldn’t touch Brazil as there was an impeachment potential as well as scandals about bribery and corruption.

“But we looked at it slightly differently and said ‘yes the politics don’t look great and the economics aren’t great but actually let’s think about who benefits from this environment – it’s the corporates who are doing their trade with countries outside of Brazil’.

“There they get dollar revenues and for the big exporters the currency depreciated 60 per cent and it doesn’t take a lot to work out which companies are doing business with countries outside of Brazil and not relying on the consumer for their revenues.

“I think the story is still a positive one and the way we look at it is those countries that are willing to do reforms are where we feel most comfortable to be invested because emerging markets goes through cycles,” the AXA IM manager said.

“Now you are getting countries like Argentina, Brazil to some extent, India, Indonesia, those are the sorts of places we feel comfortable investing in right now because we feel momentum is going in the right direction and change is happening.”

[loganair] 27/3/2017 10:40

Russia's budget in 2017 may receive additional revenues of some 1.5 trillion rubles ($25.9 billion at the current exchange rates) if global oil prices stand at the range of $50-$60 per barrel, Russian Energy Minister Alexander Novak said.

According to the official, such issues as the market situation, volatility and the ruble-dollar rate were among the factors affecting the oil prices.
The minister added that he expected the price of Brent crude oil to average $50-60 per barrel in 2017.

[loganair] 27/3/2017 10:25

The value of the Russian ruble is set to rise for the fourth consecutive month despite a drop in oil prices of more than 10 percent. Other energy exporters have seen their currencies crash.

“This is Russia’s paradox, which is still logical: lower rates, better economy, buy the ruble.

"The Street is still bullish on the ruble, hence the resilience in the face of falling oil. Even if the central bank cuts the key rate,” said Dmitry Petrov, a trader at Nomura.

On Friday, the ruble strengthened to 57.2 against the dollar and 61.8 against the euro.

While in the past the ruble fell if oil slipped, now the value of the Russian currency is growing despite crude losing more than $5 per barrel in March, trading at $50.78.

The ruble surge was not even disturbed by a surprise key rate slash by the Central Bank of Russia on Friday. The key rate was cut to 9.75 percent from 10 percent, policy makers said in a statement.

The Central Bank noted that inflation in Russia is slowing faster than expected. The regulator expects to reach the goal of four percent inflation by the end of the year.

“Inflation slowdown was broadly facilitated by the ruble appreciation amid higher than expected oil prices, persistent interest in investment in Russian assets among external investors, and a drop in the sovereign risk premium,” noted the Central Bank.

The regulator expects the Russian economy to grow 1 to 1.5 percent this year, as it “keeps pursuing a conservative approach to the forecast, which assumes an oil price reduction to $40 per barrel by the end of 2017 and its further staying near this level.”

[loganair] 27/3/2017 09:37

The Central Bank of Russia just reversed course and unexpectedly cut rates to its lowest level since 2014 as inflation continues to fall at a faster pace than it expects.

The bank lowered its one-week repo rate by 25 basis points to 9.75% from 10.00%, and suggested that more cuts could be coming this year.


During the press conference after the decision announcement, central bank governor Elvira Nabiullina suggested that Friday's cut was not a one-off, but that further monetary easing will be gradual.

"In other words, although the easing cycle has started, Russia's central bank is not yet on the brink of lowering interest rates dramatically," William Jackson, Senior Emerging Markets Economist at Capital Economics, wrote.

"For our part, we think the large output gap will mean that both core and headline inflation will fall further, even as the economy recovers," he added. "This in turn should allow the central bank to undertake a lengthy easing cycle. We expect the one-week repo rate to be lowered to 8.00% this year and 6.00% in 2018."

Moreover, in the accompanying policy statement, the bank wrote that the inflation slowdown is "overshooting" its forecast and that economic activity continues to recover. "While assessing evolving inflation dynamics and economic developments against the forecast, the Bank of Russia admits the possibility of cutting the key rate gradually in coming Q2-Q3," it added.

Nabiullina also noted that the transactions in the foreign exchange market had not produced a significant impact on the ruble exchange rate, while the factors in favor of its strengthening were predominant.

The Russian Central Bank improved the forecast for the Urals oil price from $46 to $55 per barrel in 2017, and from $50 to $60 per barrel in 2018.

"The bank expects a gradual increase of the average annual price for Urals oil from $55 per barrel in 2017 to $60 per barrel in 2018 and its retention at this level in the future, is planned."

According to Russian Economy Ministry, average annual price for Urals oil in 2016 averaged at $41.8 per barrel.

Chief Economist of Alfa Bank Nataliya Orlova said that the decrease in interest rates signals the bank's conviction that inflation is under control.

"We completely understand the Central Bank's argument. Inflation decreased sharply in February and March and under favorable conditions it might reach the four percent mark this summer, reflecting the success of the Central Bank's strict policy. Decreasing the rate by 25 basis points says that the Central Bank doesn't have concerns about not reaching its inflation target this year," Orlova said.

Orlova expects the bank to further loosen monetary policy at forthcoming meetings.

[loganair] 23/3/2017 11:02

Estonian flag carrier Nordica will begin scheduled Tallinn-St. Petersburg Bombardier CRJ900 service on May 15. The service will be 13X-weekly.

“Renewal of the Tallinn flights is long-awaited for Pulkovo airport. The Estonian capital has always been a high-demand destination with St. Petersburg residents, both as a tourist and business route as well as a transit point for further travel,” Northern Capital Gateway CCO Evgeniy Ilyin said.

“The flights also open up transit opportunities for flying from St. Petersburg to our other Nordica destinations via Tallinn—such as Munich, Kiev, Oslo, Stockholm, Vilnius, Brussels, Nice, Vienna, Berlin, Hamburg, Amsterdam, Split, Rijeka, Trondheim and Odessa,” Nordica CCO Kristel Penu.

Scheduled flights between St. Petersburg and Tallinn have not been operated since fall 2015 when Estonian Air ceased operations and filed for bankruptcy.

Nordic Aviation Group was established in September 2015 to guarantee flight connections for Estonia. Later the airline was rebranded as Nordica.

[loganair] 22/3/2017 09:46

Finance Minister Anton Siluanov said the ruble was overvalued by 10% to 12% at the moment. Verbal interventions by Siluanov have been beside the point because the central bank is sticking with its free float while keeping rates on pause since September.

On top of verbal interventions, the Finance Ministry started a program to use windfall revenue from higher-than-forecast oil prices to purchase foreign currency.

Looking ahead, growth in gross domestic production should settle between 1.5 percent and 2 percent, an improvement from previous estimates.

"On the whole we agree that the economy will be growing faster than initially expected," Siluanov said, "Previously the outlook for this year was 0.6 percent."

"February inflation eased to 4.6 percent from a year ago. Price growth is on track to fall to the central bank’s 4 percent target by year-end," according to Siluanov.

The central bank has so far declined to join a drumbeat of concern about the currency’s strength. It’s made a resumption of foreign-currency purchases for reserves conditional on meeting its inflation target of 4 percent, according to the head of its monetary policy department, Igor Dmitriev. The central bank, which in 2015 announced a goal of boosting reserves to $500 billion in the long term.

[quepassa] 22/3/2017 09:24

Thank you, loganair.

QP

[loganair] 22/3/2017 09:02

Central Bank of Russia Added 300,000 Ounces (9.33 tons) of Gold To Reserves in February.

Russia’s central bank holdings were at 1654.705 tons of gold at end of February 2017.

[loganair] 13/3/2017 09:54

Since the global oil prices plummeted in 2014 and western countries imposed sanctions against Russia over referendum in Crimea, the Russian economy faced serious challenges. According to the Federal State Statistics Service (Rosstat), in 2014 the inflation rate surged to 11.36 percent, reaching a five-year maximum of 12.91 percent in 2015.

In December last year, Russian President Vladimir Putin instructed the government to adopt an action plan aimed at ensuring that by 2019-2020 the country's economy growth exceeds the global economy growth rate.

"The latest Markit Business Outlook Survey indicates that Russia’s private sector companies remain strongly positive towards their year-ahead outlook for business activity in February. In fact, business confidence was at its strongest level since June 2013, as the net balance of firms forecasting growth has increased to +29%, up sharply from +18% in October last year.

The study conducted from February 10 to 24 found a marked improvement in expectations associated with increased optimism in all sectors of production and services. Russian companies also expect a sharp increase in business revenue over the next 12 months, "at +34%, up from a net balance of +25% in October." Along with this, according to the study, Russian private sector companies are planning to increase job creation within the next 12 months.

"Greater optimism at firms aligns with stronger readings from the PMI survey data, which hit an eight-and-a-half year high at the start of 2017 as the economy lifted itself to one of the top global economic performers," Samuel Agass, an economist at Markit, said.

[loganair] 09/3/2017 10:09

Vladimir Markin, deputy general director of RusHydro said he remained optimistic about Russia's economic growth in the next few decades.

"The next twenty years will see Russia's sustained economic growth, which will be based not on virtual speculative parameters, but on real figures related to electricity output, industrial and agricultural production, as well as housing and the construction of roads and bridges, among other things," he said.

Independent Russian expert Ilya Popov, for his part, drew attention to the fact that foreign investors often single out Russian as one of the most promising countries when it comes to financial injections.

"The Russian market remains one the few such venues that can allow an investor to obtain a very significant income when making a non-maximum investment," Popov said.

He added that foreigners are still confident that Russia's economic growth will depend on the energy sector, which is why they prefer to invest in this industry.

However, other sectors of the Russian economy also deserve to be mentioned, Popov said, referring to the pharmaceuticals, biotech, information technology and telecommunications sectors.

"Drawing investors to these industries and their development will help ensure Russia's long-term economic growth," Popov pointed out.



Last month, the Austrian newspaper Wiener Zeitung wrote that the anti-Russian sanctions introduced by the West have proved to be ineffective, with the Russian economy showing clear signs of recovery.

Russia reacted to the sanctions by strengthening its domestic production, especially with respect to metallurgy and agriculture, the article said.

The newspaper cited German economic expert Dietmar Fellner as saying that Russia's economic recovery, which is happening in spite of ongoing Western sanctions, "boosts the country's self-confidence."

[luckymouse] 08/3/2017 12:41

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[loganair] 08/3/2017 11:39

Yesterday Russian FX reserves for February were announced.

$397.3bln (forcast $395.2bln) up from $390.6bln in January.

With inflation still coming down and growth in the economy all seems to be going in the right direction when it comes to how well Russia is doing at the moment.

[loganair] 08/3/2017 11:26

The world's largest energy producer is out of its longest recession in two decades
by Anna Andrianova:

Russia has exited recession, with a little help from the boys in uniform, a major statistical revision – and the global oil price. And not just any recession, but its longest in two decades. So what happened?

1. Is the economy really out of the woods?

Actually, the contraction ended a few quarters earlier than previously estimated, according to revised calculations by the Bank of Russia’s research and forecasting department. The Federal Statistics Office hasn't released a quarterly growth figure since 2015, so that's not an official, official number. The central bank had thought that quarterly growth turned positive only in the second half of last year. Now it seems Russia has been in the black since the first quarter of 2016.

“The first monthly data of this year showed more signs that Russia is expected to enjoy a broad macro recovery in 2017,” Dmitry Polevoy, economist for Russia at ING Groep NV in Moscow, said in a report. “A significant improvement of activity in January probably related to the stronger ruble, lower inflation and improving domestic demand.”

2. So the recovery is not just down to the oil price?

Well, it is a bit. Oil prices are rising following the OPEC agreement on output cuts last year. Russia overtook Saudi Arabia as the word’s largest crude producer in December as both nations started adhering to the agreed cuts. Russia’s Urals export blend averaged $53.32 in the first two months of the year, while the government plans on the basis of oil at $40 this year. Oil and gas contributed 40 percent of Russia's budget revenue in 2016. But, other sectors are growing too.

“In 2016, growth in non-energy sectors was a nice surprise,” Vladimir Miklashevsky, senior strategist at Danske Bank A/S in Helsinki, said. “For changes in the structure of the economy, growth in non-energy sectors is more important for better long-term prospects than the increase in oil prices and production.”

3. Aren't sanctions hurting?

Russian officials have been saying, in unison, that the country has become used to sanctions and can carry on just fine. In response to Russia's annexation of Crimea and support for separatists in eastern Ukraine, the U.S. and the European Union imposed curbs including limiting access to western capital and technologies.

The economy would undoubtedly get a lift if the Trump administration – currently embattled because of alleged links to Russia – decides to ease the restrictions the government has already imposed. According to the majority of economists surveyed by Bloomberg, the ruble would gain 5 percent to 10 percent in value in such a case.

GDP would also get a boost, to the tune of 0.2 percentage point this year and 0.5 percentage point next year, the survey showed. The International Monetary Fund has calculated that the international restrictions might have initially reduced real GDP by 1 percent to 1.5 percent, while prolonged curbs may result in a cumulative loss of as much as 9 percent of economic output in the medium term, according a staff report in 2015.

4. What about ordinary Russians, how are they doing?

Consumer demand was the main growth driver in Russia for decades and it bore the brunt of the recession as inflation, propelled by the ruble’s fall, choked it. Inflation is easing though, thanks to tighter policy from the central bank with its inflation goal in mind. While retail sales are yet to catch up and move into positive territory, they have curbed their decline, the Federal Statistics Service said Feb 22. The Bank of Russia is targeting 4 percent inflation by the end of 2017, while economists in a Bloomberg survey see consumer-price growth easing to 4.3 percent by then.

(Personal note - February inflation was 4.6% the lowest in 5 years, down from 5% in January)

William Jackson, senior emerging market economist at Capital Economics, wrote.

"Inflation is likely to be lower than most expect, the interest easing cycle will ultimately be much larger than the markets are currently pricing in."

5. How do the growth forecasts compare with the past?

Well, they're not spectacular. Part of the reason is that, according to central bank governor Elvira Nabiullina, the country needs reform to unlock further possibilities. Without that, growth potential will likely be capped at 1.5-2 percent. That mightn't be enough to satisfy Putin. He's told Economy Minister Maxim Oreshkin to prepare a plan to accelerate growth to match that of the global economy by 2019 – – a prospect that would mean they'll have to find at least another percentage point from somewhere.

(Personal note - Russian GDP averaged 7% from 2000 to 2008)

[loganair] 08/3/2017 11:15

Russian inflation just plunged to its lowest rate in nearly five years.

Consumer prices rose by 4.6% year-over-year in February, shy of the 4.7% increase that economists were expecting and below the prior month's print of 5.0%.

This was the lowest rate since June 2012.

Prices rose by just 0.2% in month-over-month terms, compared to expectations of a 0.3% uptick.

Back at its February meeting, the Central Bank of Russia held rates at 10.00% and noted that it saw less room for rate cuts going forward amid rising inflation risks.

However, Tuesday's "data make the next central bank interest rate meeting on 24th March an extremely close call. Moves in market-based inflation expectations and the three weekly CPI released due between now and then will determine whether the Board lowers interest rates or stands pat," William Jackson, senior emerging market economist at Capital Economics, wrote.

"We will firm up our forecast closer to the time although, as things stand, we think it’s more likely than not that the Board will opt to lower interest rates," he added. "Either way, with inflation likely to be lower than most expect, the easing cycle will ultimately be much larger than the markets are currently pricing in."

[loganair] 02/3/2017 09:56

Russia’s Gazprom (JRS 2nd Largest Investment) increased its share of the European gas market to a record 34 percent last year. This means Russia will remain the biggest supplier of gas to Europe through 2035, according to Royal Dutch Shell and BP.

"Last year we delivered 179.3 billion cubic meters of gas to Europe. This is 12.5 percent more than in 2015. Our market share of the European market has increased to 34 percent," said Gazprom Deputy Chairman Aleksandr Medvedev.

"Europe has always been and continues to be a priority market for Gazprom," Medvedev added.

Last week, Royal Dutch Shell confirmed Russia will continue to be top European gas supplier at least through 2035, echoing comments by BP in January.

While LNG supplies led by Qatar were stagnant last year, a surge in US shale crude production did not materialize due to a lack of firm contracts and higher prices.

“Russia will certainly remain Europe’s largest gas supplier for at least two more decades,” said Vladimir Drebentsov, chief economist for Russia and CIS at BP in Moscow. Gazprom will not lose its position even if increasing demand in Europe is filled with LNG supplies, he added.

According to Gazprom’s Medvedev, this year the company plans to sell gas at $180 to $190 per thousand of cubic meters, up from last year’s $167.

The rise in prices is linked to surging oil prices, explains Aleksey Grivach, deputy CEO at Russia's National Energy Security Fund.

“Gas prices are tied to oil prices. But not on day to day basis, but in accordance with an average crude price for the previous six to nine months. This makes gas prices more predictable and less volatile,” he said.

[loganair] 02/3/2017 08:47

One area I take great interest in are the international flights into Moscow and St Petersburg by the major European airlines.

From 2012 through to early 2016 they were reducing their flights which indicated to me that the Russian economy was in trouble.

Over the past 6 months Finnair has doubled its flights from both Moscow and St Petersburg to Helsinki while KLM have just announced that it has increased its frequency form St Petersburg to Amsterdam from daily (7 flights per week) to twice daily (14 flights per week) which can only be good news as it shows to me that business men are now returning to Russia and therefore the Russian economy is returning to good health.