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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 (903)	2/7/1999 11:02:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 1301

Z Analyzer and Craig: I am still VERY OPTIMISTIC on LUKOY. LUKOY has not done so well recently, but I am not surprised. To me it looks like the IMF is keeping any real trading away from Russian stocks right now. If the IMF caves in and helps out Russia some more, that will pave the way for the foreign debt restructuring and renewed interest in Russian stocks. The answer here will not come until April or May though. Right now the world is confused about Russia because both the U.S. and the IMF are slamming Russia and the PM of Russia was a "communist". Since oil prices are still very low, that has been pretty much the nail in the coffin for interest in investing in Russia. When will this change? I don't know. But almost every dire prediction made about Russia in the last 6 months has not come true. Recently almost all wage arrears from the government were paid, and tax revenues are up (thanks to the devaluation). If oil prices were a few dollars higher, there would be zero foreign debt servicing problems in Russia. One thing is of interest though. The GKO restructuring is allowing about $100 million of rubles into investors hands without any way to pull the cash out of Russia for 1 year. Currently there are plans for allowing this cash to go into Russian stocks. The rules are getting set up for this. It looks like in a couple of weeks this cash may start buying Russian equities (except for Gazprom which will not be allowed). So, maybe the Russian stocks will come back alive soon. Lots of wall street types have switched from tech to oils recently. There has been unprecedented shut-ins of high cost wells in the last year. Very soon oil prices will start reflecting this. My theory is that oil is destined to trade above $20 a barrel probably indefinitely in a few years. If that is the case, Russia, a net exporter of oil would surely benefit and LUKOY would of course too. I am trying to buy more LUKOY and ROS (I already have a bunch of both). I am still sitting on a small loss in both these stocks. These Russian stocks are worth 10 times what they are trading at to BEGIN WITH. I am currently ignoring all of the western hype that basically says buying Amazon.com (a web page and a warehouse) at a prices to sales ratio of 200 is a better buy than buying Russian stocks (huge natural resources, and potential) at a price to sales of 0.2.