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

To: Rob Shilling who wrote (809)	11/15/1998 3:52:00 AM
From: Z Analyzer	Read Replies (1) \| Respond to of 1301

<<If Russia becomes a more normal economy, say in 5 years, and its stocks trade at one times GDP, stocks like LUKOY and ROS would be trading 40 times higher for a 5 year annual rate of return of 110%. But the odds are that when the economy gets better there, the initial 1000% appreciation in the stocks will happen quickly IMHO>> Good to see some life here again. Rob, I think these numbers are a little optimistic since there would be many more companies included in GDP by then. Also, these multiples result in price to sales or price to book ratios that are hugely excessive.

To: Rob Shilling who wrote (809)	11/16/1998 11:13:00 AM
From: jbe	Respond to of 1301

Rob, here's a brief item about Russia's production decline, from Saturday's Washington Post. I should warn that what it does not make sufficiently clear is that, until the recent crisis, Russians have actually had MORE, rather than LESS, access to consumer goods. That is because of imports, of course. Local markets have been bursting with goods brought in (from Turkey, mostly)by the nation's army of shuttle traders. And I would even contest the statement that "living standards have declined steeply." However, thanks to the ruble devaluation, imports of everything (including food, of course) are now priced out of reach of most people. HARDSHIPS IN RUSSIA Since the 1991 collapse of communism and the disintegration of the Soviet Union, living standards in Russia have declined steeply, causing poverty and despair among ordinary Russians. The nearly seven years of market reforms have failed to transform agriculture and industry, and the devaluation of the ruble in August has made imports of food and goods much more expensive, further straining Russians' budgets. The United States this week agreed to send 3.1 million metric tons of food to sustain Russia through the winter. Fewer domestic consumer goods have been available to the average Russian in the past seven years. Here are some examples of declining production figures: 1990 * 1997 Meat (including poultry meat) 6.6 1.4 million tons Butter 0.8 0.3 million tons Canned goods 8.2 2.2 billion cans Salt 4.2 2.1 million tons Bread 18.2 8.9 million tons Pasta products 1.0 0.5 million tons Footwear 385.0 32.0 million pairs Silk 1,051.0 134.0 million square yards Coats 17.2 2.3 million (in 1992) Cement 83.0 26.6 million tons Beer 874.0 655.0 million gallons Watches and clocks 60.1 5.0 million Refrigerators/freezers 3.8 0.1 million Vacuum cleaners 4.5 0.6 million * data represent command economy, which had weakened substantially by 1997 Production of industrial and consumer goods plummeted starting in 1991 and reached a low point in 1996. search.washingtonpost.com