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[loganair] 23/5/2018 14:25

Russian economic recovery under way in April despite sanctions: Retail sales in Russia picked up in April, while real wages growth exceeded expectations as the unemployment rate fell, suggesting an economic recovery was under way, according to data released on Tuesday. After two years of recession caused by a slump in oil prices and Western sanctions, the Russian economy is now recovering along with oil, the rouble has generally stabilized and global commodity prices remain favorable for an economy dependent on exports of energy and raw materials. Retail sales, the key gauge for consumer demand, the primary driver of economic growth, were up 2.4 percent year-on-year in April after a 2.0 percent rise in the year to March. Capital investment, the next most important driver, was up 3.6 percent year-on-year in the first quarter after increasing 1.4 percent in the same period a year earlier. “The latest Russian activity figures suggest that GDP growth picked up to about 1.5 percent year-on-year at the start of the second quarter,” the research firm Capital Economics said in a note. “These data also provide early evidence that the tightening of U.S. sanctions and the fall in the ruble in early April have had little impact on the real economy so far.” This year, the economy is projected to expand by 1.5-2.0 percent, according to the central bank’s forecasts, after growing by 1.5 percent in 2017. Real wages, which are adjusted for inflation, rose 7.8 percent year-on-year in April, beating analysts’ call for a 5.9 percent increase. At the same time, the unemployment rate inched lower to 4.9 percent in April, its lowest since August 2017, from 5.0 percent in March.

[loganair] 22/5/2018 09:07

Syme, manager of the JO Hambro Global Emerging Markets Opportunity said 'Russia is the biggest emerging market beneficiary of oil price rises.' It produces an annual 2.9 billion barrel oil surplus. Oil's move from an average price of $54 in 2017 to $77 last week is worth $67 billion to the country, or 4.3% of GDP. ‘At this oil price, Russian assets should be performing very strongly, yet the Russian ruble has fallen 7.8% against the US dollar year-to-date.’ ‘Politics notwithstanding, if there is one emerging market that most benefits from this environment, it is Russia.’

[loganair] 21/5/2018 08:30

Despite U.S. sanctions impacting on some elements of Russia’s foreign trade, recent reports suggest that, in part because of the strong oil price the country is currently running a budget surplus.

[loganair] 19/5/2018 13:42

Higher oil prices are here to stay. Here’s why, and what to buy by Dr Matthew Partridge: Eleven months ago, the price of Brent crude oil was less than $45 a barrel; a few days ago it breached $80 for the first time since November 2014. To make sense of what’s going on, I approached Richard Hulf, who, with John Dodd, manages the Artemis Global Energy Fund. This fund primarily invests in oil and gas stocks, along with companies in the wider energy industry. A lot of pundits have focused on rising tensions in the Middle East, especially the recent decision of the United States to pull out of the Iran deal. However, Hulf thinks that the changes can be explained by “supply and demand with a bit of geopolitics layered on top”. On the demand side, “demand from emerging markets continues to increase strongly, while even developed countries are still consuming crude in large amounts”, says Hulf. Electric cars are starting to emerge as a mainstream product that could hit oil prices down the line, but “they will take longer to emerge than everyone predicts”. At the same time, as “oil majors have bowed to shareholder pressure and have cut capital expenditure to boost returns on capital”, the supply of crude oil has weakened, with inventories declining. In the longer run, Hulf is bullish on crude, though he does accept that “in the medium term a significant number of projects will be coming online”. He estimates that fundamentals alone can support a crude price of around $70, while geopolitical tensions could keep the price significantly higher. The US shale boom is overhyped: The shale oil boom has dramatically boosted US output over the last five years, but it has been “overhypedR21;, and, as a geologist, Hulf says “it is clear that the Perriman Shale Basin could never match the reserves of somewhere like Saudi Arabia”. This may seem pessimistic, especially compared with the optimism of a few years ago. However, Hulf claims that his analysis of shale’s potential is shared by shale firms themselves, since “even they’ve admitted to me that they are close to their technical limits”. Another problem with shale oil is that “there is a massive lack of export infrastructure, which means that it is very expensive to transport”. As a result, it sells at a large discount to the global price “which is discouraging short term investors”. Overall, “the whole idea that shale oil could produce an uncontrolled and unbridled expansion of oil and gas production was unrealistic”. Three oil stocks to buy now: Given these views, it should come as no surprise that the Global Energy Fund has recently reduced its investment in American shale companies. Instead, he is now focusing much more on traditional deepwater drilling. One company that he likes is Lukoil (LSE: LKOD), the Russian energy company (currently his sixth largest position accounting for 3.8% of the fund’s portfolio). Hulf particularly likes the fact that it “has a lot of promising assets in the Caspian Sea”. Another company that he strongly recommends is Encana Corporation (NYSE: ECA), Canada’s largest natural gas producer, due to its “diverse portfolio and strong production base”. Global Energy Fund’s third large holding is CNOOC Limited (NYSE: CNO), a subsidiary of China National Offshore Oil Corporation. Hulf likes this stock because of its exposure to Chinese offshore gas. However, he is also interested in a project in Guyana, in South America, which CNOOC is developing in association with Exxon. Overall, he thinks that investors should look for companies “that have an interest mix of high-quality energy assets”. Hulf is also “very interested in the transition of gas, but less so in the destination”. Renewable energy returns are not good enough: Finally, Hulf is very sceptical about renewable energy companies. For him, their biggest problem is that “they are simply not generating enough returns to be worth considering, and are unlikely to do so in the next five to ten years”. This is important, because his fund’s stock selection gives a large weight to profitability and returns on capital. If pressed, he thinks that it might be worth looking at onshore wind as a “potential target”. However, he cautions investors against them, because of their inherent volatility. The problem is that most renewable companies depend on large subsidies to stay afloat, “which can be removed at any time”.

[loganair] 19/5/2018 13:39

Rosneft (JRS 6th Largest Investment) has announced it is going to pay out 50% net income as dividends. The Global Energy Fund has recently reduced its investment in American shale companies. Instead, he is now focusing much more on traditional deepwater drilling. One company that he likes is Lukoil (JRS 3rd Largest Investment), the Russian energy company (currently his sixth largest position accounting for 3.8% of the fund’s portfolio). Hulf particularly likes the fact that it “has a lot of promising assets in the Caspian Sea”. Overall, he thinks that investors should look for companies “that have an interest mix of high-quality energy assets”. Sberbank has now dropped to being JRS 2nd Largest Investment being over taken by Gazprom as JRS Largest Investment.

[loganair] 10/5/2018 20:37

Russian gas sales to EU hit record high despite sanctions: European countries boosted imports of Russian gas to unprecedented levels in April with overall supplies in 2018 expected to climb above 200 billion cubic meters for the first time ever, ignoring the impact of strained relations. In the first quarter of this year, Gazprom’s (JRS 2nd Largest Investment) gas deliveries to Europe reportedly increased by 6.6 percent to $12.4 billion against the same quarter a year ago. The deliveries to European countries kept on growing last month, even after the winter heating season ended. The official added that Gazprom expected demand in summer 2018 to get close to winter levels. According to rough estimates, the company may sell a record volume of natural gas throughout the entire history of gas exports, including the Soviet period. Gazprom’s gas supplies to European countries hit an all-time high in March, beating a previous record Meanwhile, the Russian gas monopoly continues hurdling antitrust barriers to build the Nord Stream 2 pipeline that is aimed at doubling the existing capacity of the Nord Stream pipeline from Russia to Germany. Gazprom also completed the deep-water section of first thread of the Turkish Stream gas pipeline. Last month, the company said it was ready to build the Nord Stream 3 pipeline, if necessary.

[loganair] 03/5/2018 11:15

China, Russia and Gold in the De-Dollarizing World - An asset backed currency, used by Russia and China, may be the biggest challenge to Emperor Dollar: Trending and gaining traction throughout the economic world is the increasingly relevant search for safe and secure alternatives to the US Dollar. Some due to geopolitical reasons and pressures, others from recognizing the significantly deepening debt associated with the US Dollar and government. Many have started questioning and doubting aspects of its sustainability and inviolability over the ballooning short and long term. Recently underscored by expected “trade negotiations” with the US’s largest debt holders (Japan & China) which are now apparently to include exploring aspects of sovereign debt restructuring. Others are looking to innovative crypto ideas in the hope that extra-governmental blockchain backed mechanisms of peer-to-peer “agreed value” might be the path to securing wealth. In short, all of these approaches are looking for the security which gold together with similar recognized hard assets like silver have provided and assured since the dawn of our varied successive civilizations. China, Russia, Turkey and quite a few others see themselves sanctioned, shackled and hindered by the overwhelming market dominance of the American currency and the quickly changing policies linked to it by successive US administrations most especially of late. Some refer to this as the “weaponization” of the US Dollar as this millennia’s new normal. The tariffs introduced by the US government as a form of behavior modification for other nations are understandably unappreciated and are increasingly resisted. It is likely that worsening currency as well as trade tiff’s are in the cards. The Chinese yuan is gaining internationally among users. Russia, Turkey, and Iran are making payments in their national currencies. Iran recently announced a switch from the dollar to the euro as its reporting currency. (NOTE - as soon as Iran made this announcement the US Government said it is going to abandon the nuclear deal it has with Iran and will reintroduce sanctions.) Russia and China already have a currency swap agreement that avoids settlements in the greenback. Even Saudi Arabia will have to make a choice probably sooner than later, to stay with the petrodollar fix, or go with its biggest customer – China and therefore the yuan. China is Russia’s largest trading partner with 15% of Russia’s international trade for 2017. This year it has grown to 17.2%. In 2014 just 2% of payments for Russia’s exports to China were paid in rubles, and 9% of China’s exports to Russia were paid in yuan. In 2017, this has increased to 9% and 15% respectively and continues to grow. There is persistent speculation and growing talk in the financial markets that Russia and China may be discussing expanding the role gold, silver and possibly other hard assets might have in realigning the value of both the yuan and the ruble independently of the US Dollar. So far it remains in the realm of rumors, then again that too is a start. Whether this remains rumor, or emerges as something more, it is a topic well worth examining if only from a risk management point of view. There are a number of countries, which no doubt are paying close attention to what may develop. Some to join and some to try and spoil the party. However this plays out, such shifts will not be smooth or pleasant as the effects are global and will resonate throughout all financial systems, especially within the United States. It is no secret that the central banks in China, Russia, Turkey, India and some other nations have been steadily increasing their physical gold holdings, as well as repatriating their bullion from the United States, for example Germany, and Turkey just recently this past April. There are persistent and growing unconfirmed rumors here in Moscow that both Russia and China have formulated or are outlining plans to launch some form of a gold-participatory currency system to replace the greenback as the world’s dominant currency. Whether it will be a Ruble or a Yuan, or something entirely different is still unclear, but something interesting is no doubt afoot within this fog of speculation.. That being said I have no idea how such a system might actually look, it’s organizational profile, how it would be regulated, standardized and traded, or whether it would be a basket of hard assets (gold, silver, energy) securing it, or only gold. The key attractor for the financial world which has traditionally parked its funds in US Dollar government bonds, is if an alternative currency system is governmentally supported, asset backed and interest bearing, then the appeal of that added value and security should make such an alternative realistically appealing. It may be the single key factor which will allow any chances for real competitive use against the Dollar, Yen, Renmimbi or Euro, all of which are fiat. Backing currencies today exclusively with gold is highly unlikely; however, there is realistic potential for a new form of currency possibly connected with a state regulated blockchain crypto-currency concept, or the partial exchange within such a currency system for gold as its referenced anchor. These do have possibilities and can occur without unduly testing credulity or imagination. The trend towards de-dollarization is happening, of that there is little doubt. Equally true is the fact that today this is just an irritant to the US government and the Federal Reserve. If implemented, it will in time erode capabilities the US can bring to bear economically, militarily and politically to all corners of the world through global financing of its dollar debt. That would be more than just an irritating for the US. No major country currently backs its currency with gold, but many have in the past, including the US. The US effectively abandoned the gold standard nationally in 1933, silver in 1968, and completely severed any linkage between the US dollar and gold internationally in 1971. The US since then has remained a fiat money system, meaning the dollar’s value is not linked to any independently redeemable asset other than faith in the US government. Looking back, the inflection point for the US to begin dollar de-linkage from gold and similar assets was to help combat the Great Depression. Faced with mounting unemployment and spiraling deflation in the early 1930s, the U.S. government found it could do little to stimulate the economy. To deter people from cashing in deposits and depleting the gold supply, the US and other governments had to keep interest rates high, but that made it too expensive for people and businesses to borrow. Therefore, in 1933, FDR cut the dollar’s ties with gold nationally, allowing the government to print (“QE”) dollars into the economy, thereby lowering interest rates. The U.S. continued to allow only foreign governments to exchange dollars for gold until 1971, when President Nixon abruptly ended the practice. It is worth noting that that before delinking from gold, the dollar had a fixed value reference of $35 to an ounce of gold, which limited and severely constrained financial and political policies. The value of gold was not permitted to be set by an open free market. Only after the dollar delinked from gold was the metal allowed to be openly traded as a commodity, at that time notably via the London Fix, and New York COMEX. It is unlikely that a fully gold-backed currency mechanism will emerge onto the world financial markets as it was before 1933, especially in this interconnected economic and information age. However, a basket of hard assets as a reference point or linkage anchor to currencies does have traction, and may very well be what is now being discussed between China and Russia. This especially as the market can and will establish relative values indexed to the assets comprising such a basket, and not be limited to a single fixed price. This also suggests that some control may shift away from the central banks and instead become market sensitized and responsive. This can be a frightening concept, as it is a distinct departure from today’s Fed practices, requiring significant political, procedural and audit realignments. Russia and China have been in working discussions to introduce gold-backed futures and similar mechanisms to circumvent the U.S dollar. It could be that over the next few decades we may witness the demise of fiat currencies such as the US Dollar, Yen, Euro and the debt excesses the printing of non-asset backed money has encouraged. Currently, with geopolitical pressures, sanctions and trade tariffs increasing against Russia and China, these two countries have come to be seen as the standard bearers or ‘white knights’ for de-dollarizing global free trade. Whether they want this role foisted on them or not. This view is growing within a number of countries who have been limited and constrained from development by the dominant default role of the US Dollar, and by extension the US Government in its follow-on ability to dictate policies and put pressure on their sovereign national affairs. The creation and introduction of a gold-inclusive indexed currency mechanism appears to be a likely event, perhaps sooner than we think. Russia has openly said that its national interests can be best served by reducing its exposure to the vulnerabilities and volatilities of global geopolitics by reducing the role of the greenback in its economic affairs. Moscow and Beijing have been actively reducing their dependence on the dollar in mutual and regional trade. In October 2017, China launched a PVP payment system for transactions in yuan and Russian rubles. This means that payments for Russian oil deliveries to China, which have reached 60 million metric tons per year and continue to increase, are now working without the US Dollar as intermediary. This also has the added benefit to allow confidentiality of transactions. This is not possible if the US Dollar is used as the medium for trade as currently all such transaction details have to be cleared, therefore known in New York. China’s launch of its own oil futures on the Shanghai International Energy Exchange plays a de-dollarization role and supports the gold-asset function as well. Today, shifting the China oil trade out of dollars into yuan takes between $600 billion and $800 billion worth of transactions out of the dollar each year. One of the several factors supporting the creation of a Russia/China gold related currency system is that just the other day the global debt has reached $237 trillion. The IMF warned this past week that the debt burden of the global economy is deeper today than it was before the financial crisis of 2008. The latest numbers for global debt is $237 trillion, up from the $140 trillion before the 2008 financial crisis. It is also worth noting that according to the Bank for International Settlements (BIS), there is also approximately $750 trillion in additional debt outstanding in derivatives, much of which is formally still “on the books” but practically can be considered swept under the financial rug, at least for now. The US Treasury Department on May 1st said the government borrowed a record $488 billion in the January-March quarter. This exceeds the old record of $483 billion set in the first quarter of 2010, when all stops were pulled to prop up the financial system. The US Treasury continues to face the growing need to finance government operations when annual deficits are heading to new record levels. Global debt has increased by roughly $21 trillion in 2017 alone. That is roughly the equivalent of this year’s US national debt. This has led to a forward-looking undercurrent of anxiety in the world’s markets, and a growing desire by some countries to do something to pre-empt being terminally caught up in these increasingly uncertain, predominantly dollar denominated risks. The latest sanctions against Russian oligarchs and their companies, as well as trade tariffs against China are also having unintended consequences. Rusal is a major aluminum producer. They provide an estimated 6% of the world’s supply. Companies are now scampering every which way to secure new supply sources because the Russian supply has been cut off by US sanctions. The sanctions caused both the Russian stock market and the Russian Ruble to fall sharply and sent aluminum prices soaring. This simply underscores the need to create alternatives to the US Dollar sooner rather than later. Unintended consequences do not stop with sanctions against Russian companies. The dollarized trade war between China and the U.S. is also enjoying its moments in the sun. After the US imposed tariffs on China that hit aluminum products, robotics, aircraft parts, vaccines, dishwashing machines and many other items, the Chinese retaliated in turn with tariffs that hit soybeans, cars, and chemical products among others. China’s response negatively affected agriculture products notably from the very same agricultural states that backed Trump. Aircraft parts and engines were a top U.S. export to China, totaling some $16.3 billion. Soybeans are a top agriculture product with $12.4 billion exported to China every year. As this evolves, we should be seeing inflation in the US and elsewhere rather higher than the Fed’s “2% sweet spot”, in fact it may unpleasantly surprise us all. Keeping in mind when loans are made in dollars, the debtor is then essentially a hostage, having to agree to the issuing central banks’ policies. The central bank determines the price of those dollars through politically guided monetary policy, and its (fiat) value thanks to currency printing. If such loans were issued in gold or asset-backed instruments, such counterparty pressures would lessen, or no longer be a feature. China for many years has made it clear that gold purchased in China is to remain in China. Russia, Turkey and recently India are of the same conviction. This allows for each of these nations to be the secure custodian and guarantor of their gold assets, reducing the risk of politically motivated seizure as can happen with currencies and debt instruments. Decisions have been acted on already by several countries repatriating their gold from the US. This is a telling sign that US control and influence is starting to shift, along with trust that had allowed the US to play a custodial role over foreign reserves for so long. Russia, Turkey and China are countries that are increasingly seen as threats by the West, in one form or another, and are rocking the currency boat. Various measures have been taken against them to make international trade and negotiations onerous at best. Whether through fear mongering, sanctions or trade tariffs, countries are feeling the force and weight of the US and its allies’ powers. As a result, they are increasingly considering re-enlisting gold and perhaps a basket of similar assets to shield themselves protect their financial reserves, and their ability to function as economically viable independent sovereign nations. The process has begun, where it may take us over the coming years is the big question and one that will redefine international trade and geopolitics for decades to come. While today this possibility is still in the realm of market hearsay, rumors, and fake news – but in this increasingly curious age what isn’t?

[loganair] 19/4/2018 10:18

The cheapest bet on rising oil prices by John Stepek: Who’ll be a winner if oil prices remain high? So let’s assume that oil continues its winning streak. What might that mean? Higher oil prices are increasingly priced into most of the relevant markets, I feel – energy stocks aren’t expensive by any means, but they aren’t as cheap as they were. But if you are interested in investing in Russia, then it’s probably the cheapest oil-dependent play around right now (indeed, unless you can find a small-cap firm that has fallen on hard times and is just around the corner from a massive oil strike, Russia is almost certainly the cheapest play on oil right now). I’m still not keen to invest there, but you could argue that I’m going against my own logic of investing when markets are cheap (and you would almost certainly be right). So if you’re looking for a cheap play on oil (even at prices that are lower than today’s), then Russia’s probably the best bet.

[loganair] 17/4/2018 10:26

Baring Emerging Europe manager Matthias Siller is standing by his 64% allocation to Russian equities, following a challenging week for the country’s stock market. Siller believes the investment rationale for holding Russian companies remains intact - even if the country’s economic recovery is likely to be subdued by tough sanctions were introduced by the US this month. When you throw in rising tensions between Russia and the UK following the poisoning of a former Russian spy and his daughter in Salisbury, as well as Russia and the US locking horns over Syria, it’s easy to see why investors such as our columnist Ian Cowie have been spooked. ‘From our perspective, we distinguish between political implications and the economic situation on the ground in Russia. If you look at the political implications, of course we hope this does not become a “hot war” in Syria, but we do believe it is prudent to apply an elevated risk premium to Russia,’ Siller explained. While the sanctions and growing geopolitical tensions represent bad news, Siller says the prospects for Russia should not be written off altogether. This is because a number of positive dynamics are at work in the Russian market and Siller (pictured) believes these have been under-appreciated by investors. Firstly, he points to improving corporate governance standards across both private and state-owned enterprises. This is demonstrated by the growing dividend payout ratio in Russia. While Russian businesses had previously lagged other emerging markets in terms of distributing income to shareholders, Siller says this has changed over the past four to five years. On average Russian companies distribute more than a third of their net income as dividends. Looking ahead, he expects higher earnings growth will translate into dividend growth. ‘Russia is setting standards for emerging market companies rather than lagging them. So far, this has not been fully appreciated by the market and continues to surprise investors positively,’ the fund manager said. Two sides to the story: Although the Russian market sold off sharply after the sanctions were announced, Siller described it as an ‘orderly retreat’. ‘In other words it was not a widespread panic. The market has distinguished correctly between exporters and domestically-oriented companies,’ Siller added. This has led to a bifurcation in the market. On the one hand, companies that are sensitive to the domestic economy have seen their share prices come under pressure as a result of a weaker rouble. However, it has been a different story for exporters, which stand to benefit from currency weakness. Siller says oil exporters, in particular, can benefit from two factors: a weakening currency which ultimately lowers their costs, and a higher oil price which boosts their margins. On the positive side, Siller notes that higher market volatility – which he expects will continue – is going to present stockpickers with investment opportunities over time. Sberbank represents the trust’s largest position, followed by energy company Lukoil and gas producer Novatek.

[loganair] 17/4/2018 10:20

Despite the turmoil of the past week, Chetan Sehgal manager of Templeton Emerging Markets investment trust, remains positive on Russia whose resources-dominated economy has been boosted by the recovery in the oil price. In contrast to the country’s politics, Russian corporate governance had also improved, he said, with more companies increasing dividend payouts to investors. Sehgal was confident that while a short-term increase in volatility would affect the Russian market the long-term fundamentals remained intact.

[andyj] 15/4/2018 14:34

The discount to NAV has narrowed considerably. I will wait for it to widen before buying more.

[loganair] 14/4/2018 08:20

The latest round of US penalties targeting Russian businesses paradoxically helps the country's budget instead of harming it, said the deputy chairman of the Central Bank of Russia (CBR). He pointed to the rebounding Russian currency which weakened initially after the announcement of penalties. “This trend for strengthening will continue, mainly because Russia currently has a balance of payments surplus,” Korischenko said, explaining that “this is largely due to rising oil prices.” He expressed confidence that the sanctions, along with the growing oil price and the rebounding ruble, would strengthen the Russian budget. “We haven’t seen such a price for oil even before the crisis of 2014… Speaking ironically, the Americans only help the Russian budget with their sanctions.” According to the official, speculation about possible sanctions against Russian sovereign debt has calmed down after US Treasury Secretary Steven Mnuchin voiced his opposition. Mnuchin said it could have a destabilizing effect on global markets. “All this means that the increased profitability, which has now been formed by the Russian sovereign debt, will attract the most aggressive investors. And this will also entail the inflow of capital and the strengthening of the ruble.” The possibility of the Russian Central Bank’s interventions is very low as the regulator adheres to its position of floating exchange rates, Korischenko said. “So far there is no reason to believe that it will renounce it.” Korischenko also stressed the importance for all the Russian companies to revise their business models as any of them could one day be in the same perilous position as RUSAL. The Russian aluminum giant bore the biggest brunt of the latest US penalties. RUSAL's stock dropped 50 percent after trading of the company's shares was suspended on major international exchanges in line with Washington's sanctions. “Therefore, generally speaking, the Russian state and economy should gradually rebuild their model, diversifying towards other partners who are not inclined to such harsh actions,” he said.

[loganair] 13/4/2018 16:36

Russia rout by Daniel Grote: Investment trusts with exposure to Russia dominate the list of fallers this week, after the US slapped sanctions on seven oligarchs and the companies they run. The Russian stock market is down 13.1% in pound terms this week, and shares in the only Russian equities-focused investment trusts, JPMorgan Russian (JRS), haven’t fared much better, falling nearly 10%. Only one of its 33 holdings is directly affected by the sanctions, the trust said in a statement this morning. Rusal, controlled by Oleg Deripaska, the billionaire aluminium magnate among the seven targeted by the sanctions, made up approximately 1% of the portfolio at the end of February. Its shares have lost more than half their value over the last week. But the impact of the US move was felt much more widely across all Russian assets. Shares in state-owned bank Sberbank, the trust’s largest holding, are down 18% over the last week. The whole situation has left Russia looking very cheap on a global basis. It is also fair to say that markets only ever get this cheap when the risks involved are high, so if you have an appetite for this sort of thing, now may be your chance.

[kenmitch] 13/4/2018 11:18

Very interesting post loganair. I agree it’s ridiculous. Every project takes years longer than in other Countries and often because it is always met with objections. Those so convinced that the U.K. is superior to other Countries should experience their often brilliant public services and transport systems, lack of litter etc etc. Bought a few JRS on the dip. Main holdings down a bit today. In the past buying after drops caused by political events has worked once it all fades from the headlines. Decent JRS dividend too.

[loganair] 13/4/2018 09:42

When the motorway was being built between Moscow and St Petersburg the direct line route took it straight through a National Park. There was such a Ho Ha! from the locals that it was built around the Park thereby adding several Km's to the motorways length. For the locals in -20C it is better for them to have trams or Underground Metro rather then having to walk. Overall City and State projects tend to be very good, like in many places it is the Private projects that have very little care when it comes to the local population. QP - It is ridiculous, it's been 40 years and the British are still talking about airports and runways around London. HS2 over 20 years. All this means is that the cost to build has gone up and up. HS2 was initially going to cost around £15bln, now they say £50bln. Russia's proposed high speed train from Moscow to Kazan which is double the length of HS2 is expected to cost around $12bln (£9bln) and that is including all the rolling stock being built by the Germans in Germany.

[loganair] 13/4/2018 08:23

Another difference between St Petersburg and cities in the UK, from nothing 200yds of tram tracks, poles etc put in, in just 48 hours, and a tram was running along it. In the past 10 years all 3 Moscow airports have been completely modernized and a 4th airport built whereas after 40 years London still can not agree where to build another runway let alone a new airport.

[kenny] 13/4/2018 08:03

I have only visited St Petersburg twice but I agree that it is one of the best cities in the World.

[loganair] 13/4/2018 07:48

QP - Agreed, why the Russian market is trading on a ridiculously cheap p/e of just 6. It seems to me JRS dropping to 450p is a bargain. Russia are one of the few countries that are running a balanced budget or at the current oil price a budget surplus and luckily for them have the best central banker in the OECD countries. Living in St Petersburg I have seen how Russia's second city is unrecognizable to what was like in the 1980's when buildings were still showing bullet holes from WW2. Even as late as 2008 tap water would run a rusty earthy brown, where as even today London water is disgusting to drink straight from the tap, and now St Petersburg is a vibrant modern city.

[montyhedge] 12/4/2018 10:07

At least not holding Rusal bonds, panic there.

[loganair] 12/4/2018 10:04

I've read the FT article on Russia and Sberbank and to me is didn't read that negatively.

[loganair] 12/4/2018 09:04

Toys - Profit just about paid for the interests on its debt. Stores no longer exciting for children to visit. When my son was younger he much preferred his local Early Learning Centre than our toys R Us. Brazil - Also a slump in commodity prices. Labour/Communist leader wasting the countries money on the poor who voted for him, instead of investing in the future and on infrastructure. Massively corrupt, same reason why Nigeria with so much potential hasn't got any where. China now has more high speed rail than the rest of the world put together. Investing in the Silk road and Maritime road. Russia - Has the best and most independent Central Bank Governor who I would like to see as the next President of Russia. Also it is the only country in the world that has all 10 of the strategic metals. If the US doesn't want what Russia produces they just sell to China. China, Russia and Iran with on the periphery Syria, Turkey and Vietnam make a very powerful up and coming trading block.