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 wrote (603)	9/2/1998 8:17:00 PM
From: Rob Shilling	Read Replies (1) of 1301

Vi, what is your position in Russia ?? Are you long or short or both ?? What would it take for you to go long ?? I think one way or another the political crisis will end in a matter of days. After that, the uncertainty will die off and every piece of reforms that the government proposes will be applauded by the markets (IMHO). It looks like they will move to a currency board of some type. Also, they will reduce taxes, especially on oil companies. Look at it this way: Russia had 0.7% GDP in 1997 with normal oil prices. If oil prices go back up, Russia will actually be better off than 1997. That is because their debt service will drop thanks to the GKOs restructuring and the progress made on reforms (though probably small). The only question is where are they going to get the money to pay off notes as they come due (since the international community won't let them borrow because of the default). That answer will probably be that Russia will get more bailout loans from the U.S. or G-7 (as they have alluded to, if Russia implements reforms). The RTS index still has not dropped below the low it made on last Thursday's 17% drop. My guess is that the political problems may end as soon as this week. If that happens there is going to be a big rally in the RTS. It should also set the stage for continuos improvement in Russia's economy (there is going to be some rapid changes). Note, Russian stock prices are below where they first started trading. The RTS index would have to go up almost 10 times to make a new high. I don't think it will happen soon, but at least part of the move could happen very fast. All it would take is one mutual fund to start buying.

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