While 2011 was a seriously down year for the emerging markets across the board — Russia being down less than other BRIC countries, the first quarter 2012 saw a dramatic rebound. Among the oil & gas companies Lukoil and Gazpromneft (the old Sibneft) were up 24%, Rosneft was up 19%, Tatneft 39%, TNK-BP 26% and Gazprom 27%. The price of oil remains strong, domestic demand is solid and, overall, commodity exports continue to generate positive earnings growth…On the other hand, stock market prices are slumping in this, the second quarter due to continuing concerns about the EU economies and growth in China.
2012: Prospects for Russia
Given the strong start this calendar year, there appear to be solid prospects for the Russian economy and stock market in 2012. Last year, the BRIC markets generally got crushed and the Russian market was down over 20% so that, today, the market P/E is about 5 making it the cheapest one in the Emerging Market space. At current prices, Russian stocks are a bargain relative to their international peers. The MSCI BRICs index is up 12.2% year-to-date, with an average gain in these markets of 12.9% . Both tallies are well above the 8.9% gain for the benchmark MSCI GEMs index so far in 2012. All of the BRICs markets are in the list of the top eight EM performers this year, Russia being up over 10%. Read more →
WTO — Finally!
Global trade ministers on Friday approved Russia’s bid to join the World Trade Organization, giving Prime Minister Vladimir V. Putin a victory on the international stage at a time of rising domestic opposition to his hold on power.
The Nigerian trade minister, Olusegun Olutoyin Aganga, struck a gavel to announce that the W.T.O. trade ministers’ meeting here had accepted the bid. Because the organization operates by consensus, Russia had to first reach bilateral agreements with 57 of its current 153 members to secure their support.
“This result of long and complex negotiation is favorable both for Russia and for all our future partners,” President Dmitri A. Medvedev said in a statement read to the conference by the first deputy prime minister, Igor I. Shuvalov. He called on world leaders to continue working for freer and fairer trade, adding: “Russia is ready to contribute as much as possible into this work.” Read more →
Putin vs. Medvedev in 2012
Public opinion polls in Russia reflect exhaustion with the Putin Brand…Even he may come to realize he would be better advised to reverse course as per my earlier analysis (see below). In the short term, his United Russia party may suffer Duma losses in the mid-December national elections.
This fall the members of Russia’s State Duma, the national legislature, are up for election and it is widely assumed that United Russia will again have a comfortable margin although other parties will be represented in the next Duma, as at present. Nationwide, thousands of candidates, representing three or four organized parties, or no party, stand for election at all levels of government in the Russian Federation on a continuing basis… Russia today is a free market democracy.
Working Party Seals The Deal On Russia’s Membership Negotiations
Russia’s accession to the WTO cleared a major hurdle when the WTO Working Party on its accession approved, ad referendum on 10 November 2011, the package spelling out Russia’s terms of entry to the organization. The Working Party will now send its accession recommendation to the 15 —17 December Ministerial Conference, where Ministers are expected to approve the documents and accept Russia as a WTO Member.
On 10 November 2011, the Working Party on Russia’s accession, chaired by Ambassador Stefán Jóhannesson (Iceland), agreed, ad referendum, on the terms of the country’s membership to the WTO by adopting the package containing reforms to Russia’s trade regime, and the commitments that Russia undertook to implement as part of its WTO accession. Read more →
WTO Membership Will Improve Russia’s Investment Climate
This article was written by Anna Andrianova for RUSSIA: BEYOND THE HEADLINES on November 3, 2011
Russia is aware of the damage its reputation is inflicting on the country’s ability to attract foreign direct investment and trade partners, according to Deputy Minister of Economic Development Stanislav Voskresensky.
In his keynote address at the recent Russian Business Investment Summit (RBIS) in New York, Voskresensky stated that the Russian government knows that the country’s dependence on commodities coupled with the widespread belief that it has an unfavorable business climate has hindered its economic growth,but that the government is working to improve the climate as well as the perception.
Another barrier to trade has been the country’s exclusion from the World Trade Organization (WTO), although that may be about to change. Just as the business summit opened in New York, it was announced that Georgia had reached an agreement clearing the way for Russia’s WTO membership, which observers say will jumpstart trade and investment.
“It will be a surprise to everybody when in a few years Russia will move into the world with its young management and its world-class companies. Russian companies will do very well internationally,” said John Conner, a portfolio manager at Richmond-based Third Millennium Russia Fund (TMRFX) who attended the RBIS conference. He added that Russian steel companies are already entering the world market, and that Russian oil companies will be next. Read more →
Russian Trade, Investment Opportunities
John Connor talks about the outlook for Russia’s World Trade Organization membership, investment opportunities and the growth of the country’s tourism and “low-end” automobile production. Connor speaks on Bloomberg Television’s “InBusiness with Margaret Brennan.” (Source: Bloomberg)
Russian Stock Investment Strategy
John Connor talks about investment opportunities in Russia’s equity market and strategy. Connor speaks on Bloomberg Television’s “InBusiness with Margaret Brennan.” (Source: Bloomberg)
Russia’s Dynamic Duo
Last Saturday was a “historic” moment in Russia. At the political convention of United Russia, President Dmitry Medvedev announced that Vladimir Putin would stand for election as Russia’s next President when elections occur next March. Putin then took the podium and announced that Medvedev would be asked to form the next Cabinet after this December’s elections for the State Duma, Russia’s national legislature, as Prime Minister, Putin’s present job. (He would have to resign as President to assume such role or Putin could hold over until March)… I was still in Moscow from a week of meetings with leading oil & gas companies, including a visit to Lukoil’s largest refinery in Nizhny Novgorod, and the reaction to these announcements was “as expected”. Certainly this tandem in leadership has been very effective for Russia’s economic growth and these announcements remove uncertainty as to future economic policy since it is widely assumed that Putin will win. Read more →
The Future Of European Gas
Last week, Russian Prime Minister Vladimir Putin launched a major pipeline that will start pumping gas to Western Europe as soon as next month. With the click of a computer mouse in front of flashing cameras, Putin opened the valve to let the gas into the first Nord Stream pipeline at the Portovaya compressor station at the Russian-Finnish border. Read more →