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

To: Z Analyzer who wrote (803)	11/14/1998 9:58:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 1301

Hi Z Analyzer, The Russian stocks seem to have stabilized ahead of the end of the debt moratorium. We know 50% of the banks will fail after the moratorium ends. If next week goes by without to much bad news, that will be a plus. Since most of the big banks are just hedge funds, I wouldn't mind seeing some of them go down. The middle size banks are slowly starting to take over because they concentrated on loans instead of gambling. Apparently the proposed 1999 budget will be very tight with a 2% deficit or surplus (before debt service). If a budget passes like that, the IMF will probably come through with the loans. There is talk that the Asian countries may be turning around and it may be time to start investing there again. My guess is that Russia is 6 months away from being "deemed investable" since Russia collapsed several months after the bottom of the asian collapse. I think we are running out of super bad news. Russia seems to be limping back slowly. The central bank reserves have been trending up. If oil prices start rising, that could be enough to turn the corner. My opinion is that I would not let some downward movement in Russia stocks shake us up enough to sell. The reason is that once things recover, the upside is huge. I don't believe that Russia is not a superpower (as the news people broadcast). Russia is an inefficient version of the U.S. The media is only comparing stock markets. The Russians have just finished building the first part of the multinational space station. Countries like Indonesia can't do this. Russia can build aircraft and nuclear missiles. Russia has vast natural resources. When Russia gets its act together, it will be a big player in the world. When that happens, it won't matter If we bought LUKOY at 40 or at 8, or ROS at 15 or 2, we will make a lot of money on all Russian stocks. Remember Yahoo has a higher market cap than Russia...buying Russian stocks is like buying Manhattan island from the Indians. (something like $15 in beads as I remember). Also, starting with Templeton's new Russian mutual fund, private citizens in Russia will be able to buy Russian stocks with small initial investments. Fast forward a few years and what will happen when the average Russian that has a good job can buy RTS index stocks with his/her 401K like investment vehicle (like in the U.S.)? I don't think the market cap of the RTS index will equal one small U.S. company after that.