PT Bernum, stop clowning around (sorry I couldn't resist the pun),
Anyway, you seem kind of negative. I am positive about Russian stocks but I don't have a lot of company.
O.K. the ruble is falling some more, there are predictions that it will cross 9.5 sooner than expected. The debt restructuring was viewed negatively by the bond holders, which to me is good for Russia. Russia needs every dollar/ruble it can get. From the Wall Street Journal, with the low end estimate on the GKO restructuring, the budget deficit would still be about 60 billion rubles. This is $8 billion or so, but as the ruble depreciates, it is kind of hard to pin a dollar value on it. So, if you take the $8 billion deficit, that is about 1% of GNP if you don't count a potential shadow economy. 1% of GNP is better than the IMF was wanting Russia to have for 1999 (Of course Russia cheated by defaulting on its debt). But in looking for a silver lining, the energy companies are automatically booking more rubles thanks to the ruble devaluation. This could help budget revenues by itself. Add an uptick in oil prices (which seems to have started) and there is more progress towards a break even budget. If tax collection continues its upward trend, that would be help too.
Of course, Russia still has to pay principal on its notes as they come due. Also, a ruble free fall would not be a good thing. I realize the ruble devaluing is also hurting the economy and hurting Russia's people, so you can't just look at budget revenues to gain the whole picture. Add the political situation and banking situation and things are still wild.
But, my philosophy is that out of chaos comes opportunity. Assuming Russia is still on the map a year from now, the energy companies especially look good now (Lukoil). Well that is my bet, we will see. We could get some more dramatic falls in the Russian stock market, but at some point markets are supposed to "price it in".
The next few days is crucial. Victor C. has to create some stability in the political and economic situation. We will see. |
