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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Still Rolling who wrote (107)	5/12/1998 5:52:00 PM
From: Real Man	Respond to of 1301

There was an article in Barron's somewhat more than a year ago about the Russian market - how cheap it was. They were talking about 20x in 10 years. Now that it's going down rapidly any talk about the Russian market disappeared. Yet, it is exactly where it was a year ago if not lower. I guess, the sharks are playing bonds over there, which now yield roughly 20% in $$ terms. I believe the new government is a lot better and more capable than the old one. So it's an opportunity - for the brave. There is a real possibility of the debt crunch, and the market is selling. The oil prices are so low it makes me wonder.... To realize how cheap the Russian market is, compare: CORP. MARKET CAP DAILY VOLUME(TODAY) whole Russia (RTS) 40bln. 52 mln. DELL 60bln. 1.5 bln. MSFT 208bln. 1.4bln CPQ 50bln. 0.5bln. XON 179bln. 200mln. CHV 56bln 100mln. I guess, lukoil alone has more reserves than Exxon. Yet the valuation of the whole Russian market is much less. -Vi

To: Still Rolling who wrote (107)	5/13/1998 2:28:00 PM
From: Real Man	Read Replies (1) \| Respond to of 1301

I'll buy into Russia as it drops. The market is cheap. The same cannot be said about TRF, though, which is still traded at a big premium to NAV. I prefer RNE. -Vi MOSCOW, May 13 (AFP) - Russian blue chip stocks plunged sharply Wednesday amid extremely negative sentiment brought on by steep declines on Southeast Asian markets, traders said. At 6:00 p.m. (1400 GMT) the leading Russian Trading System (RTS) index was down some four percent on Tuesday's close at 279.19, as jitters in Asian markets quickly infected the Russian market. "There are all sorts of nasty rumours in the market on top of the Indonesia unrest and rumours of a devaluation of the Hong Kong dollar, and there haven't been any buyers," said Gary Kinsey, a trader with the Brunswick brokerage. "The problem is that no one is looking at fundamentals," Kinsey said. "There have been a few buyers just throwing in the towel and getting out of Russia. Sentiment is really awful." Russian equities were pasted by last year's Asian financial crisis, and Russian stocks have remained one of the poorest performers in the world this year, despite the appointment of a new, reform-oriented Russian government. Traders on Wednesday pointed to Hong Kong, where shares closed down 3.7 percent, and Indonesia, where simmering unrest continues to plague regional markets, as the major influence on the Russian market. Tom Brackenbury, a trader with the Rinaco brokerage here, added that local factors such as President Boris Yeltsin's signature into law of a bill capping foreign ownership in UES at 25 percent were also "bad for sentiment among the foreign investment community." "The whole economic picture is under question again," he added. Foreigners currently own about 30 percent of the electricity monopoly, but Yeltsin was forced to sign the bill after parliament overrode his veto. Bonds were similarly hit after a day of heavy selling on Tuesday, with yields at two auctions Wednesday inching up towards 40 percent for one-year bonds, and over 40 percent for a three-year bond. "Nobody is really keen to buy right now," said Maxim Safonov, a bond trader with the Dutch ING Bank. "People are waiting for trend reversals or a turnaround before moving back in, given the concerns about Asia and some worries about Russia too." He said the government sought to keep yields down at Wednesday's auction by redeeming less than it raised. The ruble meanwhile continued to lose ground against the dollar, trading at as much as 6.16 against the greenback, against central bank fixing of 6.143, traders said.

To: Still Rolling who wrote (107)	5/13/1998 5:08:00 PM
From: Thomas Haegin	Read Replies (2) \| Respond to of 1301

Craig, now is a good time to start accumulating Russian stocks, but there is no rush, no need to jump and plunge. The big hurt right now may indeed be low oil and gas prices which is a big contributor to the Russian economy. I'd forget about Asia influencing Russia: This is fickle money bailing out again, but in real terms Russia is in a better situation than Asia (IMO) because the politics develop favorably in Russia whereas in Asia politics is still a mess, most notably in Indonesia. TRF usually trades at a big premium to NAV for which there is no reasonable explanation, IMO. RNE is closer to NAV, however not a purely Russian play. There are several Russian ADR's traded in the U.S., LUKoil for example. TRF and RNE both generally stick to blue chips which I think is sensible. I personally own Inkombank ADR's, but I'm showing a loss right now. If I had any free money now, I'd buy more of it as I think their fundamental position has not changed in the last 3 months since I bought. Vi, indeed your efforts are much appreciated here. I wonder how many people are out there lurking. regards, Thomas