GlobalInvestor

Total Rating:
0 / 0

3 Comments

    • Tue Aug 19th 08:43 AM | Rating: 0 0
      Commented on:
      Russia's Too Risky - Barron's
      Most of the time a comment about Russian markets turns into political discussion. My view: 1) Dont buy Russian blue chips. It doesnt matter whether Russia started or Georgia started, US is right or Russia is right etc. - the decisive factor is that many investors especially from US think Russia is not safe and overreact to negative news which are already inflated by western media. 2) Buy Russian small caps because Russian fundamentals are fairly solid, it is ridiculously cheap market and the small caps are traded primarily by locals and some european investors who see the political risks more realisticaly.
      View article »
    • Tue Feb 26th 02:24 AM | Rating: 0 0
      Commented on:
      Time To Sell Russian ETFs and Stocks
      Re: Richard Shaw

      1) Nationalisation risk

      Comparing populist government of Venezuela with Russian government is propably little bit unfair.

      The developments associated with end of Mr. Putin's president mandate indicate positive attitude. The government has managed the transition of power in very professional manner. Also Putin has chosen Medvedev, not Ivanov, as a replacement for him. Medvedev is very liberal, intelligent and much more market economy based person then any of his colleagues in the presidential administration. This is clearly a positive sign for informed investors.

      Disagreement of Russian government on certain issues (Kosovo, Iran, ...) is pragmatic a) it prevents the government from loosing face in front of the russian population b) certain level of global instability helps Russia because the oil prices go up. If they dont disagree they would be wasting their political "brand". Same is if Coca Cola sells the drinks without putting on the bottles Coca Cola brand which they invested huge money in.

      Regarding nationalisation of oil industry Russia said 8 years ago that oil industry is a strategic asset for the state and that it will be increasing its ownership control. There is no recent or unanticipated change in government policy. Surely who wants to invests in oil or defence industry must be careful.

      2) Potential ban on investment in Russia

      Making investment illegal in countries such as Iraq, Afganistan etc. which are marginal markets where most institutional investors dont know these markets exists is different than preventing investment in Russia which is BRIC country with huge level of investment and the investment industry employing one of the highest paid investment professionals in the world of which large number are U.S. (and other western countries) citizens. I dont think the U.S. government could get away with stoping it - the guys from Goldman, ML, Morgan Stanley, Citibank etc. and the multinational corporations owning Russian assets would go mad.

      Anyway, I am biased because I am invested in Russia at the moment. Nevertheless I am very interested in opinions which markets are currently better than Russia?
      View article »
    • Sun Feb 24th 21:57 PM | Rating: 0 0
      Commented on:
      Time To Sell Russian ETFs and Stocks
      I am not Russian but:

      Russia is now one of the most politically stable countries in the world as demonstrated by the recent elections and polls in Russia. Putin is not really democratic type but Russia is a big country not used to democracy and Putin did a good job by balancing interests of different groups while strengthening his position. He managed to restore the national pride and create stability.

      Making announcements internationally that demonstrate Russian military power is part of the game but the likelihood of open Russian military action is far less than the likelyhood of U.S military action as demonstrated by recent past. Currently U.S. is expanding their bases accross Eastern Europe under the excuse of protection against middle east or korean missile attack which according to russian as well as western military experts is bullshit and if Putin would not respond to this move he would appear as totally stupid. I would like to see what would Mr. Bush administration announce if russia starts installing rocket sites in cuba claiming that it is for protection against nuclear attack from North Korea. U.S. current foreign affairs policy is far more aggressive and the world will probably benefit from having Russia and China as a balancing power against the U.S. military and geopolitical monopoly.

      Russia is basically an oil country. And it is the one oil country which does not have to fear U.S invasion. U.S. can invade Iraq, Iran or Panama but not Russia because it would be the end of all financial markets. U.S. can bribe government in Indonesia or Equador to take most of the oil profit but can not bribe Russian government because they dont have to be affraid of being killed by CIA if they dont take the bribe because the Russian intelligence has also certain power.

      Military conflict would not benefit anybody.
      1) Western investors are heavilly invested in Russia and more funds are coming rather than leaving the country. Their lobbysts will not let war happen.
      2) U.S. have problems with economy and the high oil price does not really help them. If they decide to fight with Russia which is an oil super power the oil prices will explode.
      3) Russian government realise they need foreign capital and the importance of the integrity of financial system and stock market.

      The risk of nationalisation exists but only for the strategicly important companies whose owners will be in serious political confilct with government (e.g. Yukos). Therefore the nationalisation risk can be removed by understanding the ownership structure or selecting the companies which government dont care about. The corporate governance, reporting standards and research available for Russian market is at relatively high level for the large companies some of which are also traded in London or other foreign exchanges. The market manipulation and fraud is far less than in China.

      Fundamentally Russia is one of the most attractive markets at the moment. The infrastructure and consumer stocks are safe heaven because of the oil money flowing in already approved budgets in this direction regardless of the U.S. recession which guarantees good results of companies in these sectors in next few years. In the same time the valuations are very attractive - PE around 10 compared to PE around 30 in China.

      To sum up, if one would assume the scenario of escaleted conflict between U.S. and Russia it is better to sell everything and enjoy the cash before it starts. Otherwise Russia is probably the safest place to be invested at the moment.
      View article »
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»