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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: P.T.Burnem who wrote (537)8/26/1998 3:48:00 PM
From: Rob Shilling  Read Replies (1) of 1301
 
So what is your stake in Russia P.T. ???
Your basically predicting the end of Russia as we know it, so I was curious, are you short ???
Earnings are definitely not going to be the same. However, a 50% ruble devaluation would make ROS have a PE of 2.25, hardly overvalued. Yes they have some dollar debt, but nobody knows if their their positive working capital was in dollars, or really how much $ revenue they have from international calls.
How about LUKOY ? Their revenue is in dollars and their costs are in rubles. LUKOY will benefit. Especially when oil prices recover. That is unless your end of the world scenario includes $2 oil.
Russia has really hurt the bond holders. The stock market is down 90%, so the bond holders shouldn't get away untouched (IMHO).
I really don't blame Russia for the devaluation and default. They got twice as much IMF money than they asked for, and Russia's crisis just got worse. It is time for Russia to go it alone.
Looking forward, the deficit will shrink to $8 billion or less thanks to the restructuring. Higher oil prices will be the frosting on the cake. Russia needs to get away from the IMF and go it alone, the IMF was clueless about how severe the oil price drop would hurt Russia and how currency speculators would hurt the ruble. Not to mention the IMF money was just used up to make shorting the ruble a profitable business instead of paying back wages to the population (that should have been the first priority).
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