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

To: Real Man who wrote (959)	4/5/1999 7:18:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 1301

It is time for this thread to WAKE UP !!!! I will take on this responsibility:). I have investments in Russian stocks and I see great potential. Russia is not dead. Has anyone noticed that for the first quarter Russia is the best performing world stock market ??? Has anyone noticed that oil prices are now back to levels that actually are not too much lower than historical norms (WTI over $16, Brent around $15). Also look at natural gas prices which are now over $2. Russia's GDP is 50% oil and gas. 75% of tax revenues are oil and gas. Let us look at some news from Interfax today: 1) Inflation was 2.8% in March, according to figures from the State Statistics Committee, First Deputy Prime Minister Yuri Maslyukov told Interfax Monday, adding that inflation continues to fall. Inflation was 4.1% in Febru-ary, 8.5% in January and 11.6% in December. .... So even with the printing of rubles, hyperinflation did not surface in Russia 2) The Finance Ministry expects the remaining differences concerning an IMF loan will be settled sometime soon after April 20, Finance Minister Mikhail Zadornov told 'Mayak' radio. The upcoming IMF mission talks will be purely technical, since political decisions were made during IMF Managing Director Michel Camdessus's recent visit to Moscow, he said. Russia does not need a large loan of say $8 billion, he said. "We do not seek to live in debt, but we need a sum that will ensure the fulfillment of our basic tasks in the financial sphere. Going deeper into debt makes no sense," he said. ... IMF money means Russia will become an "investment" again. It will also give the green light for foreign debt restructuring including much of the soviet debt 3) Federal budget revenue in the first quarter, including revenue to the Road Fund and other extra-budgetary funds totalled 88 billion rubles, a Ministry of Finance source told Interfax Monday. Total budget revenue in the first quarter was slightly over 11% of GDP, he said. This was about 1% of GDP less than planned. Revenue was the highest in March, at 34 billion rubles, he said. ... From the figures for the 1999 budget, I know that Russia is supposed to average around 38 billion rubles per month in revenues for the year. March comes in at 34 billion. Let me point out that revenues tend to grow throughout the year and summer may bring more revenues. But more importantly The average oil price in January was $11, in February $10.5, and in March $12.5. Now oil is near $15 for Brent and natural gas is over $2. That could mean that April's revenues could hit the magical 38 billion rubles. Also, the 38 billion ruble target includes some foreign debt repayment. At 38 billion rubles, Russia is actually running a 2% primary surplus. So, bottom line here is that Russia is MEETING its targets in all areas. There are no more budget problems, wage arrears are slowly fading away, inflation is slowing. So what is left? In the short term, foreign debt payments, but that can be solved with a combination of the IMF money, debt restructurings and surging central bank reserves due to Russia's huge trade surplus. In the medium term, look for the worst problems incurrred during the crisis to fade away. Specifically, the banking system will continue to unfreeze. Dead companies assets will continue to be reallocated to healthy companies. Also hopefully, the ruble will either stablize or strenghten. In the long term, the fight on corruption will be important as well as the election of more pro-capitalism type people to government (parlimentary elections at the end of this year, and presidential elections in the summer of 2000). Now is the time IMHO to buy and hold the Russian blue chips. I own Lukoil (OTC BB:LUKOY) and Rostelekom (NYSE:ROS). The upside is INCREDIBLE IMHO.