Project "ZZ". Good news, Mr. Putin!
V. Putin. During a visit to the research and production association "Energomash". 12 April 2019 of the year
“Good news, Mr. Putin, ”writes Kenneth Raposa, magazine columnist "Forbes". "Good news, Mr. Putin."
The Russian stock market, this analyst recalls, writing for the Markets column is today the second largest emerging large market after China.
And it is very strange to note that this news, which is excellent for Russia and for foreign investors, “did not really influence too much” on the behavior of capitalists, who were looking for where to invest their money.
For example, Andrew Miller, director of information technology at Mondrian Investment Partners in London, believes that Russia has "insufficient weight." According to him, Russia still “looks cheap” (no matter what the reason) for managers operating with value. “We have only a few energy companies that earn dollars, and it’s on them that we’ll stay,” this director says.
Meanwhile, the exchange fund VanEck Russia (abbr. RSX) closed the past week with an increase of 14,4% (from the beginning of the year), ahead of the MSCI Emerging Markets index (this is the name of the developing markets index. - O. Ch.). Ahead of RSX, only Chinese MSCI China, grown up by 23,6%. But the Dow Jones Industrial Average Index rose by 13,2% this year. That is, the Dow Jones industrial index is even lagging behind!
Of course, the issue of sanctions is important, and K. Raposa in his article does not bypass it.
At the beginning of 2019, the sanctions were lifted from Rusal. The bottom line: the value of its shares in Hong Kong jumped more than 50%. The aluminum giant, more precisely, its controlling stake, previously belonged to the “sanctioned” Russian billionaire Oleg Deripaska. Deripaska is still under sanctions to this day, but his “punishment seems to have nothing to do with the investigation of the Russian collusion by special adviser Robert Muller,” the author of the material points out. The magnate is still forbidden to enter the United States and sell personal assets in dollars, but for some time his company has the right to "freely do business with Western companies without fear of retaliation by the US Treasury."
The analyst emphasizes the following financial fact: the Russian main index did not detect any significant rebound after the publication of Special Prosecutor Muller’s report in March of 22. It is believed that Wall Street no longer gives this stories no value and does not expect any new sanctions.
And the result: from 25 in March to 12 in April, shares of the Moscow Stock Exchange rose by 2,5%.
The Moscow stock index this year shows excellent results in general. The RTS index, calculated in dollars, reached the 13-month high of 1253 points.
Russia is also helped by rising oil prices and lowering geopolitical risks.
More recently, “in 2014, after annexing the Crimea, which was part of Ukrainian territory, Russia returned to its status as a villain in the Cold War,” Mr. Raposa writes. The United States did not recognize Crimea as part of Russia. The sanctions started in the 2014 year and have only intensified since then. Now the situation is changing. The US Senate no longer makes efforts to tighten sanctions. In fact, for Russia blew "fair wind".
But Russian investors should remember about Venezuela. Washington has included Putin’s support for Syrian President Bashar al-Assad into his August 2008 2016 sanctions law. Therefore, there is a possibility that large Russian companies helping the Venezuelan leader Nicolas Maduro may face similar sanctions. In March, 2019, the Eurofinance Bank, has already registered sanctions for helping Maduro in issuing Petro cryptocurrency. Eurofinance is a joint venture of the Venezuelan investment bank Fonden, the Russian bank VTB (25% of shares) and the Russian gas company Gazprom (another 25% of shares). Raposa recalls that Rosneft is the main shareholder of Citgo, the American subsidiary of the Venezuelan oil company PdVSA. And therefore, additional sanctions against Rosneft are likely: after all, the US is trying to achieve Maduro’s resignation. Washington considers Venezuelan leader Juan Guaydo a true leader.
And yet, there is no universal support in the US Senate for strengthening sanctions. “Sanctions are often a double-edged sword,” said Republican Senator Ron Johnson (Wisconsin) the other day. In his opinion, it’s time for America "really should take a step back and assess where we are"
“Good news, Mr. Putin,” says Raposa.
German experts also write about good news for Russia: while some car companies successfully rely on the car market of Russia, others are jealous of them and ... miss profits.
"Daimler" "many years" stubbornly led negotiations about the plant in Russia. Probably led them like no other car manufacturer.
For many years, the company from Stuttgart has been negotiating with the Russian government, before finally venturing to enter the automotive market in crisis, writes in the publication Wirtschafts Woche Maxim Kireev.
The last months, according to the analyst, have proved the correctness of those who aspired to Russia. According to the Association of European Businesses, in the 2018 year, the car market grew by 12,8%. The total turnover of the industry has reached, according to the calculations of the consulting company PwC, about 33 billion euros.
And the company from Stuttgart is not the only one who has returned to Russia now. Immediately, Opel, which recently announced its return to the Russian market.
Chinese brand "Haval" completed the construction of a plant near Tula. The Chinese intend to produce about 150.000 machines per year for the Russian market.
On the other hand, to idealize the car market of Russia to anything. Here's a fact: the Russian car market today is “only its shadow,” writes Kireev. Just over a decade ago, analysts agreed that Russia, with its 145-million population, “will sooner or later become the largest automotive market in Europe.” The jumps in the growth of oil prices and the rise in the ruble exchange rate increased the purchasing power of ordinary Russians.
By introducing import duties (up to 30 percent), Russia created barriers for foreign cars. However, any capitalist who launched his own production in Russia was initially free to import spare parts necessary for assembling the vehicle on site. After 2012, manufacturers were obliged to increase production capacity to 300.000 a / m per year and to undertake to produce up to 60% components in Russia. Major manufacturers (Volkswagen, Ford, Renault, Kia, Hyundai, Toyota) fulfilled this requirement and invested billions in Russia. Volkswagen alone spent 1,75 billion euros in Russia on car production and on an engine factory in Kaluga.
However, the fat years are over. The Russian car industry suffers from overcapacity. According to the Ministry of Economic Development, the plants are loaded with a little more than 40% capacity. A quick recovery is not visible. Industry observers agree that the car market in the country will grow at a minimum. Suppliers, accordingly, invest "reluctantly", because the number of models produced in the series is "not large enough to justify its own production capacity."
As for the “Daimler” mentioned above, its cars are considered “Russian-made cars”. The successes of “Daimler” in negotiations with the Russians cause “great envy” in the industry. Volkswagen-Russland boss Markus Osegovich publicly expressed his annoyance that Daimler got better conditions than its competitors.
Vladimir Putin meets with Volkswagen concern general director Herbert Diss. 12 April 2019 of the year
And at the end of the review a few words about gold. About tons of gold. Russian gold counted in Switzerland.
Moscow correspondent "Neue Zürcher Zeitung" Christian Steiner reminds that last year the central banks of the states bought a lot of gold. And in the forefront was Russia. According to the journalist, the purchase of gold by the CBR is part of a “clear anti-crisis strategy.” Just think: last year, the Central Bank bought 274 tons of gold and therefore became the largest buyer of precious metals. According to the World Gold Council, the Central Bank of the Russian Federation accounted for 40% of all gold purchases made by the central banks of the world.
The correspondent is convinced that the purchase of gold will help the Kremlin "get rid of the dollar dependence." In addition, the precious metal will help the Kremlin defend itself against possible further US sanctions: after all, America will not impose sanctions on Russia's gold. It is not for nothing that Mr. Stöferle from the company Incrementum, registered in Liechtenstein, considers gold today to be the “most firm world currency”.
Another thing is important for Russia: the Central Bank buys gold mainly in the country. All infrastructure, from mining to processing, is located in Russia. And the precious metal is bought without the use of dollars.
As noted by Steiner, President Vladimir Putin today is proud of the large reserves of the Central Bank. Why so? Because in the US financial sanctions he sees the threat as strong as in the military force of the North Atlantic alliance. In addition, the Russian president wants to prevent Russia's dependence (for example, in the case of an oil collapse) from Western currencies. Before his eyes he has a historical example of Gorbachev, who lost money on speculation. When world oil prices fell, Gorbachev had to take huge loans from the West simply to “finance the purchase of products”.
Let's sum up.
While some foreigners are doing business in Russia, others are gloomily envious. While some investors are conducting difficult negotiations and investing capital, others, who are late, believe that they have been bypassed on the field of unfair competition. While investors, speculators doubt that Russia has something else besides oil and gas, the auto industry of Germany and China is building new capacities in the country.
There is nowhere to strengthen sanctions - this is recognized even in the US Senate, which was previously a supporter of the toughest measures against Russia. In the near future, if only the situation with sanctions does not change (there is a Venezuelan question), one can predict the growth of Russian markets. And then some cautious investors will stop arguing that Russia "looks cheap."
- Oleg Chuvakin
- kremlin.ru
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