Share Name Share Symbol Market Type Share ISIN Share Description
Jpmorgan Russian Securities Plc LSE:JRS London Ordinary Share GB0032164732 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 624.00 628.00 632.00 - 17,636 10:02:48
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 18.0 34.0 18.3 283

Jpmorgan Russian Securit... Share Discussion Threads

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On the night of October 2, 2019, Wizz Air, the European low-cost airline, commenced scheduled service between the Russian city of St. Petersburg and London, the capital of the United Kingdom. The daily flights from Pulkovo Airport to London Luton Airport are operated by a subsidiary airline Wizz Air UK. Wizz Air performs flights on St. Petersburg — London route on comfortable Airbus A321 aircraft with capacity of up to 230 passengers on board in economy class configuration. Tickets for Wizz Air UK flights can be booked on the website of Pulkovo Airport in the Trip Planner section, as well as on at a price from 29.99 euros / 25.99 pounds sterling (one way, including all taxes).
The foreign reserves of the CBR in percentage terms as of: ....31 March 2018 / 30 Jun 2018 / 30 Sept 2018 / 31 Dec 2018 / 31 Mar 2019 Euro...22.2%.........32.0%..........22.6%..........31.7%..........30.3% US$....43.7%.........21.9%..........32.1%..........22.7%..........23.6% Gold...17.2%.........16.7%..........16.6%..........18.1%..........18.2% Yuan....5.0%.........14.7%..........14.4%..........14.2%..........14.2% £.......7.9%..........6.3%...........6.5%...........6.0%...........6.6% Yen.....0.0%..........4.5%...........4.2%...........4.0%...........3.9% Can$....3.0%..........2.9%...........2.7%...........2.5%...........2.5% A$......1.0%..........1.0%...........0.9%...........0.8%...........0.8% International Reserves of the CBR as of 20 September 2019 $532.9bln, up from $462bln one year ago. International Reserves of the CBR as of 28 June 2019 $517.1bln, up from $455.5bln one year ago.
Authorities in Ukraine intend to resume regular passenger transportation with Russia’s Crimea, according to the Ukrainian Ministry of Infrastructure. Crimean authorities have welcomed the plans. “We are constructing entry-exit checkpoints. I think that everything will be finished on time, as ordered by the president [of Ukraine Volodymyr Zelensky],” Krikliy said. His words follow President Zelensky’s order in July to complete setting up checkpoints at the border with Crimea by December 20 of this year.
Ryanair, EasyJet, and Wizz Air have have applied to operate from Pulkovo Airport in St. Petersburg, Russia which could significantly boost tourist inflow to the city. The budget air carriers could attract an additional 6 million holidaymakers a year to the city by 2025. Pulkovo reportedly expects the largest increases in passenger traffic to come from Germany, France, the UK, Italy, and Spain. Northern Capital Gateway has already asked Russian transport authorities to approve routes to 33 countries, and talks are ongoing. The non-Russian airlines plan to operate year-round, with 60 percent of flights in summer and 40 percent in winter.
Russia and Norway are now the only 2 European countries whose reserves are now larger than their credit obligations = These 2 countries essentially have no debt.
OECD - World heading towards lower growth. Recommending lower interest rates for advanced economies so governments can borrow and use this money to invest in infrastructure. The USA uses borrowings for tax cuts which companies use for huge share buy backs which makes it seem the companies are doing far better then they really are = higher bonuses for the directors of these companies. Where as Russia and China are spending huge amounts on their internal infrastructure, just like Britain did from around 1760 to 1900 when Britain was a world superpower which was build on the building of their infrastructure. China has already or is spending $160bln so far on their silk road project. Russia has completely upgraded their 20 biggest airports, put in high speed rail between Moscow and St Peterburg etc...and what is the UK or the USA doing, seeing their infrastructure crumble with the UK over 40 years what to do about Heathrow expansion and 15 years about High Speed trains running from London to the Midlands and on wards to Manchester both still on the drawing board.
Moscow has continued to sell off US Treasury securities, cutting its stockpile by $2.35 billion in July, according to the latest US Department of the Treasury data released on Tuesday. Russia’s holdings of US state debt amounted to $8.5 billion in July, with long-term US Treasury securities standing at $6.2 billion and short-term at $2.2 billion. In June, Russian investment in Treasury bills was around $10.8 billion. Russia is now on par with countries like Oman and New Zealand, which are at the bottom of the list of US Treasury holders.
The Gazprom (JRS Largest Holding) has performed extremely well over 2019 (up about 45% by mid-August). The company’s net income was up 44% year-on-year over the first quarter of 2019, on account of higher gas prices having a greater impact than the decline in gas export volumes. Gazprom has increased its dividend to a record level over 2019 and has said it will base future pay-out calculations on a more transparent approach, based on financial performance. Its CEO, Alexey Miller, has been actively re-shuffling senior management and the company has been revising up estimates. Looking ahead, JRS expects energy prices to remain around current levels with possible upside. This would support their holding in Gazprom and most of the other energy holdings, where a number of stocks are underpinned by high dividend pay-outs and attractive valuations.
Russia has been among the best-performing equity markets globally, despite being out of favour with international investors. The RTS Index has climbed above its 2014 pre-Crimea levels, before sanctions were imposed. Although economic growth has disappointed in 2019, earnings and dividend pay-out ratios continue to grow. At a trailing price-earnings (P/E) ratio of just 6x, the Russian market remains extremely cheap. JRS’s underlying portfolio has a 7% dividend yield, according to its longstanding manager, Oleg Biryulyov. He adds that the Russian market is showing signs of becoming less sensitive to movements in energy prices. Manager’s view: Russian stocks were among the strongest performers globally over the first half of the year; when QuotedData’s analyst met Oleg in mid-June, he said that only the relatively illiquid Greek market had performed better. The RTS Index has climbed above its pre-Crimea 2014 levels (before sanctions were imposed), though the Index remains well below its pre-2008 level. Oleg says this strong-returns environment has coincided with a period of relatively low interest from foreign investors. Perhaps reflecting a mix of factors, including tempered interest in Russia post 2014 as international investors largely remained on the side-lines, local Russian investors have become bigger participants in the market. The sanctions created an environment where, as prices fell, many fundamentally sound businesses traded at very high dividend yields. Oleg told us that yield on JRS’s portfolio was approaching 7%. Earnings and pay-out ratios continue to grow. This is a major recurring theme – Oleg says that the team are seeing it in almost all company presentations and reports. Economic growth has disappointed in 2019: As important as oil is to Russia, Oleg says that in terms of the stock market, there has been evidence of equities becoming less sensitive to movements in energy prices. Despite the strong leg-up in oil prices at the start of the year (oil prices have since come down), the price level remains lower than a year ago. Over the same period, the rouble has strengthened against the US dollar (it has appreciated by 5.8% over the year-to-date) and the RTS Index has increased by 21.8%. Political relations between Russia and the West have proven to be relatively benign over recent months, as the spotlight has shifted to the US and China’s trade dispute. This has allowed Russian assets to largely move forward relatively unencumbered by events elsewhere. However, at the macroeconomic level, the performance of the economy has disappointed over recent months. Russia only returned to positive economic growth in 2017 and, after an encouraging 2018, real (inflation-adjusted) GDP growth might have been expected to register more than the 0.5% recorded over the first quarter of 2019. An increase in the rate of VAT has dampened spending by households, many of which continue to feel the effects from five successive years of declining real incomes. Deflation in food prices (food accounts for around 40% of most household budgets) has provided some respite to consumers, although, as we discuss later, this continues to be unhelpful to the food retail sector. Employment levels have bounced back strongly since the nadir of early 2016, with data reported by the Federal State Statistics Service showing an unemployment rate of 4.5% for July 2019. The figure was a slight drop from mid-2018, which aligns with the view that the economy has lost some momentum. With inflation at 4.6% in July (low against long-term averages but more than 2% higher than last year), the central bank has some room to trim interest rates to try and restore momentum to the economy – a recent 0.25% cut has reduced the interest rate to 7.25%. It seems plausible that rates are likely to be trimmed by at least another 0.25% before the end of the year. That said, it is unlikely that domestic demand-focused companies will drive returns for JRS over the next 12 months; export-oriented businesses are expected to carry the baton. Russia’s food retailing sector, led by Magnit and X5, was one of, if not the fastest-growing in the world a few years back. Over recent times, Oleg says that the sector has been heavily affected by food price deflation and the declines in real incomes. Oleg says that over the past three years it has been a priority of the government to rebuild foreign reserves, which it has succeeded in doing – they are over $500bn – they were under $400bn two years ago. Oleg also added that for the participation of domestic institutional investors to increase markedly, the equity market needs to evolve beyond a predominant bias to energy-related companies and dividend plays. Structural discount persists: Even accounting for the stock market’s strong recent performance, it remains at a structural discount to most peers. Oleg says that high-dividend yields have effectively acted as price floor for many companies; a lot of fundamentally sound companies have traded at high yields. The trailing price/earnings ratio for the Russian market stands at about 5.5x, is a substantial discount to global equities. Oleg says that Russia’s long-standing structural valuation discount, specifically to many emerging markets, reflects factors such as its concentrated exposure to the oil and gas sector. In his view, Russia has not developed enough consumer-focused companies, particularly in the technology sector. That said, Oleg adds that it is harder to explain the relative ‘cheapnessR17; of the commodities companies. We note that Gazprom trades at a trailing price/earnings ratio of 3.1x, as at 9 September 2019. The discounts applied to the commodities companies could reflect concerns over corporate governance standards and political interference. Investment process: The manager seeks to identify attractively-valued companies with sustainable above-average returns. The investment approach for JRS is based on JPMorgan’s emerging market investment process. JPMAM’s global team is responsible for producing a macroeconomic outlook for each country and region. JPMAM also has a large team of researchers that is looking at companies on a sector basis across all regions of emerging markets. Over 20 of the team are involved in research on Europe, the Middle East and Africa (EMEA) stocks. They help maintain JPMAM’s comprehensive in-house research database. Oleg, in addition to being the lead manager on JRS, is head of EMEA within JPMAM. Oleg visits Russia at least once a year but he also sees many companies when their representatives come to London. He says that accounting accords with international standards and he thinks that corporate governance has improved, in general. JPMAM analysts submit ideas for Oleg’s approval and he has final say over what goes into the portfolio. The analyst reports review each stock in great detail, looking at a range of measures including return on equity (ROE), which they want to be sustainable – this includes an assessment of how capital intensive the business is; cash generation; the strength of the balance sheet; and how sensitive the company is to inflation. They will also examine the durability of the company’s business, corporate governance standards and ESG (environmental, social and corporate governance) attributes. Oleg wants to hold companies that look attractive across a range of factors. Returns are derived from earnings growth and dividends, which are within the control of the company, and valuation multiple changes and currency moves, which come from changes in market sentiment. JPMAM prefers companies that it believes can benefit from each of these. Stocks are assessed for inclusion within the portfolio on the basis of predicted returns. The predicted return is derived from a predicted exit price/earnings ratio and an internal forecast of returns over the next five years (returns are expected to normalise after year three). Oleg breaks down the portfolio into ‘trading’; stocks that he will move in and out of on valuation grounds, ‘quality’; stocks that will form the core of the portfolio as long-term holdings, and ‘premium’; stocks – the crème de la crème. Turnover works out to about 25% to 35% per annum.
After the drone attacks on two Saudi Aramco facilities makes Russian oil and gas seem far more stable and reliable.
Russia plans to issue its first yuan-denominated bond. The yuan bonds are expected to be issued by the end of the year or early next year, marking the first time that Russia issues its sovereign debt in the Chinese currency, officially called renminbi. While the two trade partners have been planning the move since 2016, it has been postponed several times. While Moscow currently has enough foreign investors ready to buy government bonds, it is still interested in extending its list of foreign creditors. As Chinese investors do not buy Russia’s ruble-denominated bonds, the launch of the yuan bonds would give them an opportunity to invest in Russian state debt. However, the new bond in the Chinese currency will not change anything in the short-term, but rather will have a long term impact, as it “lays the groundwork” for future investment, Anton Bakhtin, investment strategist with Premier BCS, explained.
Russia’s budget for this year is based on an average price of US$40 per barrel of crude as Moscow continues its cautious budgeting approach after the fallout of the 2014 price crisis. Saudi Arabia, on the other hand, needs oil at US$80-85 per barrel to break even this year. Urals, Russia’s key export grade, currently trades at $56.80 a barrel. “The Russian processing industry itself is not interested in very high oil prices. We don’t need to drive up [price] to the top, we already have a decent margin, in terms of budget,” Putin said in June Probably worried by the effect of the sanctions on Russia and anemic economic growth, Russian President Vladimir Putin continues to keep a tight financial policy, Danske Bank strategist Vladimir Miklashevsky said.
US economic pressure on Iran and Venezuela has deprived world oil markets of two large exporters. However, this gap has been filled by Russian supplies, earning its oil firms at least $905 million in cash, according to Bloomberg. The demand for Russian crude has also been boosted by the output cuts imposed by the Organization of Petroleum Exporting Countries (OPEC) and allied major oil exporting states. The two factors reportedly allowed Russia’s Urals blend oil to gain leverage over Brent, the global benchmark against which Urals blend has traditionally traded at a discount. Urals is heavy oil. It is a mix of the sour oil of the Urals and the Volga region with the light oil of Western Siberia. Analyst at JBC Energy explained that sanctions on Iran and Venezuela had created a shortage of competing heavier, sourer crude. This brought the demand for Urals blend in the Mediterranean to “an all-time high.”
"Russia has entrenched a credible and consistent policy framework that will deliver improved macroeconomic stability, reduce the impact of oil price volatility on the economy, and support increased resilience to external shocks,” Fitch Ratings analysts said in a statement. The nation’s international reserves amounted almost $520 billion as of August 1, according to the central bank’s data. The figure will continue to rise and will reach $537 billion in 2019 and $591 billion by the end of 2020. “Increased exchange rate flexibility and compliance with the fiscal rule support the economy’s capacity to absorb real, financial and geopolitical shocks, and limit the impact of oil price volatility on the economy,” Fitch said.
The Russian central bank bought another 18.67 tonnes of gold in June, which put the total gold holdings at 2,208 tonnes as of July 1. Russia gold reserves now stand at $100.3 billion, the Russian central bank said in the latest data release. In the first 6 months of this year Russia had added 96 tonnes of gold to its reserves. "What is more interesting to understand in the case of Russia … is not just these large numbers, but the trend. Emerging market central banks have been buying gold fairly consistently since 2010 ... because central banks are looking to diversify their reserves, they are looking for safety and gold provides that to them,” said World Gold Council director of investment research Juan Carlos Artigas. This year is no different from the last, with central banks, which have been heavy gold buyers since last year, continuing to add the precious metal to their reserves. Global gold reserves continue to climb, tracking the 8% gain in June, the biggest monthly surge in three years as trade and economic tensions rise,” said commodities brokerage share price Angel.
Excellent news for Russian supplying companies: German conglomerate Siemens has applied for a special investment contract to localize production of its high-capacity gas turbines in Russia. The move follows a 2017 scandal over the supply of Siemens turbines to Crimea. Under the terms of the contract, the components of the ‘hot gas path’ and the gas turbine automatic control system will be localized in Russia until the middle of 2023, according to the Siemens. The planned localization level of the SGT-2000E turbine will be at least 90 percent. The process will take place at the Siemens Gas Technology Turbines (STGT) plant, which is a joint venture between Siemens and Russia’s Power Machines. According to the Siemens statement, it will make significant investments in STGT and partner enterprises in order to develop know-how and increase the innovative potential of Russian companies. As a result, a full-cycle production ecosystem will be created in Russia for the production of high-capacity turbines. The German company has already identified suppliers for the localization of the SGT5-2000E gas turbine’s ‘hot gas path’ components. In 2017, Siemens was caught up in a scandal when its gas turbines were allegedly delivered to Crimea, which has been under EU and US sanctions following its reunification with Russia. Western companies are prohibited from doing business in the region.
Prime Minister Dmitry Medvedev has approved the construction of a new tolled motorway across Russia designed to significantly shorten cargo routes, local media reported. The project is expected to cost around $9.5 billion. The massive infrastructure project, the Meridian highway, has won the support of the Russian government. The highway is set to stretch over 2,000km from the Belarus border to the frontier with Kazakhstan, and it is expected to become part of the fastest trucking route between China and Europe. The motorway will reportedly cost around 600 billion rubles ($9.5 billion). The project’s operator has already bought out around 80 percent of the land required for the construction of the road. Given that tolls will be charged for trucks and cars, as well as the large capacity of the highway, the project is expected to break even in 12 years. Usually when Russia builds such infrastructure as this it is built on budget and on time and of good quality....I just wish the UK could do the same and for the same price. If the UK was going to build 1,300 miles of motorway it would cost many times more, most probably 10 times more, take many, many, many years longer to build and start needing to be repaired before it was completed.
The foreign reserves of the CBR in percentage terms as of: .......31 March 2018 / 30 Jun 2018 / 30 Sept 2018 / 31 Dec 2018 Euro......22.2%.........32.0%..........22.6%..........31.7% US$.......43.7%.........21.9%..........32.1%..........22.7% Gold......17.2%.........16.7%..........16.6%..........18.1% Yuan.......5.0%.........14.7%..........14.4%..........14.2% £..........7.9%..........6.3%...........6.5%...........6.0% Yen........0.0%..........4.5%...........4.2%...........4.0% Can$.......3.0%..........2.9%...........2.7%...........2.5% A$.........1.0%..........1.0%...........0.9%...........0.8% International Reserves of the CBR as of 28 June 2019 $517.1bln, up from $455.5bln one year ago. Note - Only 9.7% of the 22.7% of reserves held in US$ are held in US Treasuries.
One factor helping the ruble breakout? Turning away from the dollar: Russia & EU keen on switching to national currencies for mutual trade
Putin orders simplified e-visa for foreigners visiting Russia: Russian President Vladimir Putin has signed an order to ensure the introduction of an electronic single-entry visa from 2021 for foreigners visiting Russia. The service is currently available only for the Russian Far East region, where citizens of 18 countries can use electronic visas that are issued online. Starting from July 1, it will be possible to visit the Kaliningrad region using an electronic visa. National electronic visas will become valid from January 1, 2021. The single short-term (up to 16 days) e-visas will be universal, allowing people to visit Russia for tourism, business, and humanitarian purposes. The list of countries whose citizens will be eligible for electronic visas will be prepared by the Ministry of Foreign Affairs. China, South Korea, Japan, EU countries and non-EU Schengen states, as well as possibly New Zealand, will be included on the list. It is not currently planned to include the United Kingdom, Canada and the US on the list. Unlike the e-visas issued for visiting the Far East and the Kaliningrad region, the all-Russia electronic visa won’t be free of charge, costing up to $50. In the future, such visas could become multiple. A special mobile application is being planned for the convenience of customers, according to Deputy Head of the Ministry of Digital Development, Communications and Mass Communications Oleg Pak. He said that Russia has the experience of hosting the 2018 World Cup, when foreigners entered the country without a visa if they carried a Fan ID. That experience and equipment will be used for providing services for the visa online service, said Pak.
The Central Bank of Russia has been very clever, they buy gold from Russian miners in local roubles then this gold is valued in US$, thereby not effecting the exchange rate by selling roubles to buy US$. The Central Bank of Russia (CBR) reported today that the country’s international reserves amounted to $502.7 billion last week, thus exceeding the target level set by the regulator. The figure is up by $7.5 billion from the level seen a week earlier. According to the CBR, reserves increased by 1.5 percent. While Russia's international reserves are measured in terms of US dollars, they are actually highly-liquid foreign assets, comprising stocks of monetary gold, foreign currencies and Special Drawing Right (SDR) assets, which are at the disposal of the Central Bank and the government. Accumulation of holdings is part of the national policy, according to the central bank governor Elvira Nabiullina. She said last month that reaching the target volume of half-a-trillion dollars in gold bullion and foreign currency holdings would be enough to tackle crisis-like episodes.
Tightening Western economic sanctions and market pressure did not stop the Russian economy from reaching record growth last year, according to the World Bank report on global economic prospects. In 2018, Russia saw the highest growth in six years of 2.3 percent, the World Bank says in its June 2019 publication “Global Economic Prospects: Heightened Tensions, Subdued Investment,” released on Tuesday. Growth was driven by a rise in oil prices and increased revenues from net exports. Some one-off factors also supported the Russian economy, such as energy-related construction projects and the hosting of the World Cup, according to the report. However, the analysts slashed the forecast for Russian GDP for 2019 to 1.2 percent due to a decrease in oil production, part of OPEC-sponsored output cuts aimed at boosting the oil market. Tighter monetary policy and an increase in VAT at the beginning of the year has also slowed the country’s growth, the World Bank believes. The forecast for 2020 and 2021 is more positive, with the World Bank expecting Russian GDP to reach 1.8 percent and remain at this level in 2021. Meanwhile, growth among advanced economies is set to slow in 2019, while global economic growth is to drop to 2.6 percent, 0.3 points below previous World Bank forecasts. For instance, US economic growth is expected to stand at 2.5 percent this year, but may decelerate to 1.7 and 1.5 percent in 2020 and 2021 correspondingly.
Small and medium-sized enterprises in China, under pressure from Washington’s trade war, are studying the possibility of moving production to Russia. Trade between China and the US mainly relies on small and medium-sized enterprises, while currently China’s bilateral trade with Russia accounts for large state-owned enterprises. Trade between Russia and China saw historic growth last year of around 25 percent to US$108 billion, beating all forecasts.
Small and medium-sized enterprises in China, under pressure from Washington’s trade war, are studying the possibility of moving production to Russia. Trade between China and the US mainly relies on small and medium-sized enterprises, while currently China’s bilateral trade with Russia accounts for large state-owned enterprises. Trade between Russia and China saw historic growth last year of around 25 percent to US$108 billion, beating all forecasts.
China says it wants to substantially increase the amount of gas from Gazprom. Gazprom profits are up 44% to 536 billion rubles ($8.3 billion), boosted by higher gas sales volumes and prices, and promised to increase dividends in coming years. Gazprom now accounts for 5% of Russia's GDP. Gazprom usually bases its dividend payout on net income under Russian Accounting Standards, which typically only considers the parent company, saying that it also needs to fund multi-billion investments in new pipelines to Europe and China. However, the government has long argued that the company should pay out 50 percent of its net income under International Financial Reporting Standards, which take account of income from subsidiaries. The company already surprised markets earlier this month with a management-board proposal to hike the 2018 dividend to 16.61 rubles per share, up from a previous proposal of 10.43.
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