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Russian Market - report from the scene
  • Russian Government privatization plans may lift market to the new highs. 0 comments
    Dec 15, 2010 7:04 PM | about stocks: ERUS, LUKOY, MBT, MTL, OGZPY, RBL, RNGZY, RSX, SGTPY, VIP, WBD
    I don't envy short-sellers in Russia.

    Currently the budget deficit in Russian Federation is equal 911 bln of Rubles in jan-nov (~$29 bln, wich approximately are equal 10% of GDP), as Russian Ministry of Finance reports. And its value will increase, as Authority expects. Also there are few way to cover budget deficit (there listed in Government's plan). There are:
    • tax increases,
    • borrowing (issue bonds at 1 trillion Rubles),
    • privatization (sell property at 1 trillion Rubles or more).
    Early, at November, the Russian government has approved a privatization plan for sale of federal property in 2011-2013. As it expected, revenue of this sell-off could yield 1 trillion Rubles.
    MOSCOW, November 17 (RIA Novosti)
    The government hopes to get most of the privatization revenues from the sale of shares in ten major state-owned banks and companies. All decisions on the sale of these companies have been confirmed, Nabiullina said.
    The list of privatizations includes the sale of shares in oil major Rosneft (RNGZY.PK, 25 percent minus one share), RusHydro hydropower generator (7.97 percent minus one share), the Federal Grid Company of Unified Energy System (4.11 percent minus one share), the country's largest shipping company Sovcomflot (50 percent minus one share), Russia's top bank Sberbank (7.58 percent minus one share), the country's second largest lender VTB bank (35.5 percent minus one share), the United Grain Company (100 percent by 2012), Rosagroleasing agricultural leasing company (50 percent minus one share from 2013), the country's rail monopoly Russian Railways (25 percent minus one share from 2013) and Russian Agricultural Bank (25 percent minus one share by 2015), Nabiullina said.
    So ... Goals are obvious: "The government hopes to get most of the privatization revenues". This may mean that tax pressure increases will be delayed for a time, likely, at the first. At the second, Government need to put the stock's price on highest level. It's normal practices of initial offering. They gotta give some positive to markets.

    Roadshow started, didn't it?
    (the greatest Roadshow since 2008)
    At  Dec 9, 2010 reuters writes
    Russia's largest oil producer, privatization target Rosneft (OTC:RNGZY), is around three times undervalued when compared to international peers, Deputy Prime Minister Igor Sechin said on Thursday.
    "We think Rosenft is undervalued. Compare the structure of Rosneft's reserves and those of (Brazil's) Petrobas (NYSE:PBR), for example. Rosneft is undervalued by around three times," Sechin told reporters.
    And
    As interfax reports At Dec 9. 
    ROSNEFT CHIEF UPS STAKE IN COMPANY FROM 0.0028% TO 0.0051%
    Also
    Alexey Miller's column
    Gazprom is becoming ever more valuable, which is clearly evidenced by the fact that the Company's share value steadily goes up. The Company's capitalization has increased by nearly 35 per cent since the most recent Gazprom Shareholders Meeting.
    The global economy is reviving, investors' confidence is growing. By purchasing Gazprom shares, the investors once again cast their vote for the course we have shaped for the Company's comprehensive development on a global scale, they invest funds in the most promising securities putting their trust in the future.
    I have no doubt that Gazprom's capitalization will not only reach the pre-crisis level, but go up to its fair value. I give a buy recommendation!
    Local TV shows following commercials (or similar, Enjoy, this isn't as boring as commercials of Shell, ExxonMobil, etc)

    And more one funny fact: earler, at may, "German Gref, the head of Sberbank, Russia's biggest lender, became a shareholder in the firm for the first time after buying a 0.000004 percent stake worth $2,500, the bank said on Monday." //reuters

    to be continued ... (?)


    So, when you and authority banded together, you have significantly greater chances for success. Of course it may seem unconvincing for someone, but look it this way: you buy stocks and Government care about the market growth, 'cause they are interested in higher prices, at least till the sell-off.

    In fact, Russian stocks are undervalued on comparing to international peers (even taking into account the country risk premium). And this Government media propaganda is able to lift market higher. This is a powerful support for equity prices, for a time. Any way, I don't envy short-sellers.

    Russian Stock Pick

    Themes: Russia Stocks: ERUS, LUKOY, MBT, MTL, OGZPY, RBL, RNGZY, RSX, SGTPY, VIP, WBD
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