Investment in Russia and Eastern Europe Message Board

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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Real Man who started this subject	2/22/2003 9:15:35 AM
From: russwinter	Read Replies (2) of 1301

Russia is enjoying a remarkable recovery. Much of it is commodity based, but that's a good thing. Plus Putin IMO is the most effective leader in the world. He has a tough job for sure, but will often personally take the time to take on the oligarchs and thieves. Their foregn policy is constrained, and geared around relationship building with it's customers and neighbors. Russia's debt has dropped from 130% of GDP in 1998 to 40% at yearend. They have $17b in debt payments due this year that will easily be paid. Account balances are strong. Their CB reserves have grown from a couple billion to $55 b (lately have been adding a couple billion a month). They are effectively collecting taxes, and each $1 increase in oil adds $500m tax revs. Their federal budget is balanced, and based on $22 oil. They will get a windfall in the current environment. They are in a position to eliminate ALL foreign and federal debt within two years. In theory they should have one of the BEST credit rating in the world by YE 2003. The ruble (domestic based capital flowing back) is strong, and inflation largely eliminated. I'm amazed that the credit agencies haven't given them major upgrades (concerned about the wrong thing: dependance on commodity prices). Russia will now have plenty of slack to work on it's problems and issues (pop growth is one, but immigration might in time be the answer). BP just made a $6.75 b oil investment, others are lined up to follow. biz.yahoo.com There are up to three major pipeline deals in the works including one (Nakhodka) financed by Japan to the tune of $5b. The others will go to China, and Murmansk (US exports). The Russian stock market has been slow to wake up to all this. Equities there are dirt cheap. Corporate governance? A big issue for Russia's leadership, and after Enron here, I'd ask which is worse? This is a good vehicle: biz.yahoo.com I no longer have any problem with political risk in Russia or eastern Europe. I think foreign PM companies going there will do fine. China, I'm still not so sure. Good background on Russian developments: hermitagefund.com

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