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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: doormouse who wrote (746)10/13/1998 1:42:00 PM
From: Rob Shilling  Read Replies (1) of 1301
 
It is funny I didn't see you guys on this thread until the massive short covering that has occurred in Russian ADRs over the last few days.
Vi is right, a drop down 94% from the peak for the RTS index is a meltdown. Add to that that the valuation levels at the peak were not Japan 1988 or U.S. 1998 levels, and the carnage is almost unbelievable. At least ROS and LUKOY are fairly transparent. They both have web pages and post their financial results and press releases. Also, you seem to say that not having total visibility in Russian companies means not to buy them. Well first, things can get better, second, the lack of any visibility may hide much more assets than are shown right now (that would be a positive).
Note that the ruble is steady and currency reserves are going up $400 million a week. Also note that oil prices will not be low forever. Also note that most Russian stocks have low market caps and trade in thin volume. Once significant interest comes back to Russia for a sustained period, anyone short could easily lose 5 times their money (a short has infinite downside). VERY DANGEROUS. Look at the logic: The Russian AT&T is trading with a market cap of $500 million. An oil company with oil reserves larger than Exxon and BP is trading at a market cap of $2.5 billion. It is time to buy, not time to sell. But if you own DELL or INTEL or CISCO, .... that is where the risk is IMHO.
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