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November 2, 2005
4th quarter review of Russia, Wed., Nov. 2, 2005, 10:28 AM
I made a note this morning that Russia enjoyed a net inflow of capital in 3Q05 (an inflow for the first time since 1994). There was a net inflow of US$2.9 billion after suffering a combined outflow in 1H05 of US$5.6 billion. That's what happens when the sovereign rating services upgrade a country's economy and its treasury debt, as happened in August for Russia.
The World Bank now says that a genuine investment boom could be possible in Russia in the near future", according to Bloomberg. Russia's Finance Minister is also reported saying that he expected the US$521 billion economy would grow more than +6 pct this year, which would be Russia's seventh consecutive year of expansion.
But you know all that if you have been reading this blog.
What disappoints me however is that I now discover that the World Bank is forecasting an inflation rate of +12 pct Y/Y in Russia, compared to a government target of +8.5 pct.
There are just too many countries in the world suffering from inflation issues to ignore the problem. Readers ought not be ignorant of the possible damage to the global economy and implications for changes to monetary policy in the world.
But I thought I'd take the time to review some of the words I wrote about Russia in late July and early August, when I started to perceive some very positive developments there.
The following articles are a small part of the overall writing I did this year and last on Russia. I'd hope, time available, that you look at my previous words and see for yourself if there was any weight to them. Did I have a good perspective or was I missing the mark? That's the issue.
Before you do, here is my bias re Russia: I married a Polish girl 36 years ago, whose father lived as a child on the Russian border. Since that was 80 and 90 years ago there were loose borders in that region. I love the Russian food, the music, the family-oriented culture of the people. I am attracted to their incredible style and appreciation for the arts and sciences, and their focus on education. The population has been subjected to some of the worst brutalities and wars known to mankind, and they are survivors. Russian people don't quit; they may drink a little too much alcohol to get through the burdens of their lives but they persist in their efforts to get better. And nobody tells a better story. Ask a Russian to explain something, and you get the whole of Russian history, mixed in with a lot of romance and intrigue. The movies and actors and scripts of Doctor Zhivago (1965) (Omar Sharif, Julie Christie, Geraldine Chaplin, Rod Steiger, Alec Guinness) and Russia House (1990) (Sean Connery, Michelle Pfeiffer) are favorites. What else can I say other than I will always have a place in my heart for Russia.
The Ruble rules, Wed., August 3, 2005, 1:55 PM
Oh, how this rating upgrade by Fitch must put a frown on Kudlow's mug. It seems that, according to Fitch, the Ruble is now a full BBB credit, up from BBB-minus. The Russian bonds received a double rating upgrade too....
Posted in Bill Cara on August 3, 2005 01:55 PM
Update: The Russian ruble remains stable at 28.58 rubles to the Dollar.
Russia redux, Tues., August 2, 2005, 11:03 AM
Yesterday I made a point of how rapidly the U.S. Smallcap market (i.e., VBR) has been rising in recent months. This chart illustrates the point I made in the last article, in that the Russian market has been a terrific...
Posted in Bill Cara on August 2, 2005 11:03 AM
Update: The RTS (Russian Trading System) Index continued to power north, far surpassing even my optimistic expectations. The U.S. small cap market (VBR) has been a relative disappointment, as I thought it would be.
Capital has flowed into Russia and will continue to because there are opportunities there, as well as fiscal and monetary stability that more than balances the country risk that is overplayed in the U.S. media.
I find there to be a comparable risk to trading in Russia stocks to the U.S. small cap market, which is why I used the VBR overlay on the RTS Index chart.
Russia has been one mother of a market, Tues., August 2, 2005, 5:58 AM
Do you recall when I last wrote about the Russian Trading System? It was May 17. Do you recall I wrote that the Russian market would do just fine from that day forward, thank you? Well, here is what I...
Posted in Bill Cara on August 2, 2005 05:58 AM
Update: Russia metals giant Norilsk attracted a lot of investment following my articles earlier this year. Here is the up-to-date chart of Norilsk (trading on the RTS under ticker symbol GMKN). The stock also trades in the U.S. OTC under the ticker NILSY.
The stock continued for quite a run until the start of October and has recently started a new bullish phase, which occurred when I called the gold market turn a week ago Friday.
I don't have the time to get into a deep discussion about Russia today. I am just pleased to say that the equity, currency and bond markets there remain solid. And as long as U.S. markets remain strong, I expect Russia to out-perform.
The obvious concern, however, is that when the U.S. capital markets sneeze, as they did in October, some of these other markets like Russia act like they have the flu. If you have an interest in Russian capital markets, you need to actively manage. That means keeping a daily monitor, plus a system of alerts, in place.
Posted by Posted by Bill Cara on November 2, 2005 10:28:51 AM | Category: Russia