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 (693)	9/19/1998 4:07:00 PM
From: Rob Shilling	Read Replies (1) of 1301

Vi, you are correct, Russian stocks are like an option on Russia with no expiration. The way I look at it though, is if Russia gets it act together, only partially and the stocks start moving up, I will kick myself for not buying when the RTS market cap was $10 billion. This is either a once in a lifetime chance or a sucker bet. What I like about Russia is that they have been trying to get things better this year with oil prices low. If they have made any progress, once oil prices go back up, Russia will be stronger. Since most of Russia's exports are oil and gas, the ruble devaluation must have dramatically increased tax revenues to the government (but each ruble buys less). So, what I am saying is that the budget is probably close to balancing. The banks are being jump started this week and wage arrears are being paid. The downside is inflation, but with the RTS down more than 90%, big deal. Stocks like LUKOY continuing down is just amazing, LUKOY is benefiting. Any drop in Russia's economy will be more than offset by the benefits of the devaluation to LUKOY (LUKOY also just increased exports by 41%). I am looking for revenge of the emerging markets. It will come in the form of higher oil prices. We have already seen a movement in oil prices off their lows. Three tropical storms in three weeks has reduced Gulf of Mexico oil and gas output. OPEC is adhering to almost all of its cuts of 3 billion barrels of oil. Note that AHC's huge oil refinery is looking more and more like it is right in the middle of Hurricane Georges path. Add La Nina or war in the Middle East, and Russia will get a huge injection of hard currency.

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