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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: P.T.Burnem who wrote (598)9/2/1998 1:50:00 PM
From: Rob Shilling  Read Replies (1) of 1301
 
<Not really. You're betting that a bankrupt Russian government can fund its huge current account deficit without robbing the country's export industries.>

Russia had a current account surplus until this year, when oil prices hit a 12 year low. Thanks to devaluation, the current account deficit they have had recently should go positive without oil prices going up (IMHO). When oil prices do go up, there will be a big cushion.
The government deficit should shrink thanks to both devaluation and the restructuring of the GKOs. Again, add in higher oil prices and that adds revenues. Of course the economy is currently shrinking some because of the financial chaos so that will subtract some government revenues.
Once Victor C. is in office, that will end a lot of uncertainty. Then it will be time to look at what they do for the currency, how they plan to handle the tax situation ....Once they have a good plan, the west will probably bail them out big time, to make sure social unrest doesn't break out widespread.
LUKOY is down 90% from its high, it is 1/4 book and 1/5 gross sales. Oil is priced in dollars. I can't think of a better value anywhere, and definitely not in the U.S. market (IMHO).
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