Russia 01 (May 08 - Jul 10)

[winston]

How to Buy the World's Cheapest Market... at a Double-Digit Discount By Dr. Steve Sjuggerud, Daily Wealth

Russian stocks have just been obliterated...

The net asset value of the Templeton Russia Fund (TRF) is down more than 70% in less than a year. The average stock in the fund is selling for less than four times earnings – that's practically a giveaway price.

But since its March lows, the stock price of the Templeton Russia Fund has doubled... it's in a clear uptrend.

In short, Russia is now the cheapest stock market in the world... It's absolutely hated and ignored by investors, who are terrified of risk right now... And it is in a rip-roaring uptrend. You should consider getting in...

But you shouldn't buy the Templeton Russia Fund.

You see, the fund is trading at a ridiculous 50% premium to the stocks it holds. Why would anyone pay a premium for this fund? Why does this premium exist?

The Templeton Russia Fund is what's called a closed-end fund. The fund can actually trade at a premium or discount to the shares it holds. There are only a fixed number of shares outstanding. So if more people want to buy it than sell it one day, the fund's price will rise – even if the value of the underlying stocks the fund holds stays the same.

It's ridiculous to pay a huge premium to own Russian stocks when you don't have to...

Other closed-end funds out there have at least half of their portfolios in Russian stocks. And right now, they trade at double-digit discounts to their net asset values... Shares of the Morgan Stanly Eastern Europe Fund (RNE) sell at a 9% discount. The Central Europe and Russia Fund (CEE) goes for a 14% discount.

So if you want to buy the world's cheapest market, you're better off buying it at a double-digit discount through CEE or RNE than paying 50% more than you should to get into the Templeton Russia Fund.

If CEE returns to net asset value, you'll make a double-digit profit on top of whatever gains you get from the underlying stocks. You don't have to get too crafty with a strategy like this, and there are huge profits to be had...

In my newsletter, True Wealth, we took advantage of a ridiculous discount on a closed-end fund just a couple months ago. We bought it at a discount near 40%... In less than 90 days, it went to a 50% premium. It was quite an extraordinary gain – particularly when the underlying value of the fund actually went down during that time.

I typically just buy closed-end funds holding stocks I want to own anyway, waiting until they sell at a larger-than-average discount. If that's getting too fancy, then you can just buy something you already want to buy, at a cheaper price, through a closed-end fund.

Like I showed you above, you can get exposure to Russia – the world's cheapest stock market – at a double-digit discount through shares of CEE.

[LenaHuat]

CNN's Matthew Chance is introducing Russia in a series of documentaries.
It's on at 3 pm local time..

Fr a Russophile

[winston]

Russian Stock Rally ‘Has Not Run Out of Steam,’ UBS Says By William Mauldin

June 1 (Bloomberg) -- The rally in Russian stocks “has not run out of steam,” and an improvement in the economy in the third quarter may help the RTS Index gain another 30 percent this year, UBS AG said.

The 50-stock RTS has risen 72 percent so far this year. UBS recommended shares of OAO Gazprom, OAO Novolipetsk Steel, OAO Uralkali, OAO Mobile TeleSystems and OAO RusHydro.

[millionairemind]

The high oil prices certainly helped. Imagine oil that stays at $20 for 2 years, Russian economy would probably collapse.

June 5, 2009
Russia spared 'dramatic' crisis
SAINT PETERSBURG - RUSSIA has managed to avert a 'dramatic scenario' in the economic crisis, President Dmitry Medvedev said in an interview with the Kommersant newspaper published on Friday.

'For all the depth and difficulty of the crisis, it is not proceeding according to the most dramatic scenario,' Mr Medvedev said in the interview, published on the day he gives a keynote speech to the Saint Petersburg Economic Forum.

'The task of the authorities - of the government and of course the president - it to make sure that at the very least this situation is preserved,' he added.

Russia's economy, dependent on exports of hydrocarbons and raw materials, has been hit badly by the global economic slowdown and the government is forecasting a six-to-eight percent contraction in GDP this year compared with 2008.

However the prime task of Mr Medvedev and Prime Minister Vladimir Putin has been to avoid any hint that the economy is approaching a meltdown similar to the 1998 crisis when Russian defaulted on sovereign debt.

'The scenario of crisis being realised at the moment is by far not the worst one that we forecast at the start of this year,' Mr Medvedev said. -- AFP

[winston]

Russia’s Problems Impede its Long-Term Profit Promise By Martin Hutchinson, Contributing Editor, Money Morning

For global investors searching for long-term profit plays, the message is clear: Don’t spend a lot of time looking at Russia.

Russia’s Pravda, formerly the official organ of the Soviet Communist party, published a blistering attack on the United States last week. That would not seem so strange, except that the attack accused America of “descending into Marxism.”

http://www.moneymorning.com/2009/06/05/ ... in-russia/

[winston]

Looks like I may want to be a bit more patient about buying the Russian ETF ...

Worst of economic crisis still ahead in Russia

SAINT PETERSBURG : Russia has still not passed the worst of the economic slowdown and faces a second crisis wave, a minister warned Friday, clouding the mood at the country's premier economic conference.

Long-serving Finance Minister Alexei Kudrin -- known for his blunt straight talking -- said at the Saint Petersburg Economic Forum that Russia was set to face problems due to bad loans made by banks to struggling companies.

His comments were more pessimistic than an earlier speech by President Dmitry Medvedev who had nonetheless warned it was too early to pop the champagne corks to celebrate an economic recovery.

"In the presentations of the main speakers, I did not hear it said that the bottom has been reached. The president has said that we are at the worst point but it is unclear how long it will last," Kudrin said.

He went on to tell Russian state television that because of the problems created by bad loans "a second crisis wave is unavoidable."

"But we will be able to solve this by recapitalising the banks," he added.

According to a recent report by Moody's ratings agency, the level of non-performing loans in Russia was 11 percent of banks' total portfolio and could reach 20 percent by the end of the year.

Medvedev said that while the world economy had been showing signs of revival, "in my opinion it's too early to crack open the champagne."

A Kremlin official told AFP that as an expert on the economy, Kudrin was at liberty to make any prediction he wished.

The president also warned that ridding banks of bad assets and loans was in the short term "the most serious challenge for us and other countries."

( who are the "other countries" ? )

Russia will use other means such as injecting state money into the banks to solve the problem, he said. Medvedev spoke out against the creation of a "bad bank" to handle such toxic assets.

In talks with international energy companies, he promised that Russia would look at providing fiscal stimulus for oil and gas firms once the "acute phase" of the crisis was over.

"If all we do is survive the crisis, then we will be set back years, and if another crisis appears it risks being more dramatic than the one we are experiencing now," Medvedev added.

Russia's economy, dependent on exports of hydrocarbons and raw materials, was hit badly by the global economic slowdown and the government is forecasting a six-to-eight percent contraction in GDP this year compared with 2008.

The prime task of Medvedev and Prime Minister Vladimir Putin has been to avoid any hint that the economy is approaching a meltdown similar to the 1998 crisis when Russian defaulted on sovereign debt.

"I very much fear that Kudrin is close to the truth," commented Viktor Vekselberg, one of Russia's richest men and a co-owner of British-Russian oil firm TNK-BP.

"We will be running a fever for a bit yet. We just need to arm ourselves with patience. Russia has huge potential," he told reporters.

Russia's richest man, Mikhail Prokhorov, praised Medvedev's speech, saying that "the ambition of our country is not only to overcome the consequences of the crisis but also to go forwards."

The Russian central bank has cut interest rates three times since the end of April in a bid to stimulate the struggling economy and Kudrin said that more cuts would be on the way amid declining inflation.

"If inflation gets to 10 percent then by the middle or end of next year interest rates could reach 10 percent," compared to the current 11.5 percent, Kudrin said.

( why is inflation so high ? )

Prospects for the Russian economy remain hugely dependent on the price of oil which currently stands at around 69 dollars a barrel after plunging from record highs above 147 dollars last July.

Deputy Prime Minister Igor Sechin told the conference that 75 dollars a barrel would be an acceptable price crude price from Russia's point of view.

"We need an oil price of at least 75 dollars a barrel and then production projects can develop and if there is not that price then they will not develop," he said.

- AFP /ls

[winston]

The U.S.-Russian Summit Turns Routine by John Mauldin

Hands-down the most important thing in Russia is energy. It's not the headline on CNN these days, but come less than 6 months from now the cold European winters will make natural gas supply lines and shipping an unavoidable talking point. Today's U.S./Russia relationship lays the groundwork for the future of global energy markets

http://www.investorsinsight.com/blogs/j ... utine.aspx

[LenaHuat]

I spent the day at 3 major bookstores since there wasn't much to track whilst waiting for the markets to breakdown. There is a Russian-Singapore magazine named "Meridian East" on sale for $15. I hope the ST writes a piece abt the entreprenaur who created this set-up.

[winston]

On CNN yesterday..

Russia's richest man last US$24.5b last year ?

[winston]

Russia's Value Stocks byRichard C. Morais, Forbes Magazine dated August 03, 2009

Russia, the ugly stepsister of emerging economies, has plenty of promise for those who can stomach the wild ride.

Russia's economy contracted 10% in the first quarter of 2009, driven down by weakening commodities prices and a 24% collapse in manufacturing output. Economics Minister Elvira Nabiullina recently said Russia's GDP might fall as much as 8% this year.

http://www.forbes.com/forbes/2009/0803/ ... =dailycrux