Russia 01 (May 08 - Jul 10)

[winston]

The Lyxor Russia ETF 2831 is up 20.4% ! Not vested

[millionairemind]

Russian capital flight tops US$10b, inflation on rise
Posted: 22 September 2008 0645 hrs

MOSCOW: The global financial crisis has so far cost Russia up to US$15 billion in capital flight and may raise inflation up to two per cent higher than foreseen, Finance Minister Alexei Kudrin said Sunday.

"We have not yet got exact figures, but (capital flight) was some US$10-15 billion" due to the crisis, Kudrin said in televised comments, adding that Russia's investment market lost 52 per cent of its capitalisation volume.

Inflation "can be higher by one or two per cent more than what we predicted, but not by a lot," the minister added.

Russia was not alone in suffering from the crisis. "China fell, Brazil fell, and other countries too," Kudrin said, warning that it could take up to a year before the situation gets back to normal.

Officials earlier pledged to inject US$44 billion into the market to fight collapsing investor confidence and the central bank said it was slashing reserve requirements for banks by four per cent.

The RTS plunged 11.47 per cent and the MICEX 17.45 per cent on Tuesday in the worst day of trading since the financial crisis of 1998, which led to exploding inflation, the collapse of several major banks and political turmoil.

The RTS has now lost 57 per cent since hitting an all-time high in May, a slump analysts put down to a mix of falling energy prices, global market turmoil and political issues including worries over the war with Georgia.

Meanwhile the Central Bank on Thursday said that Russia's international reserves had lost US$13.3 billion, going down from US$573.6 billion on September 5 to US$560.3 billion on September 12.

- AFP/yb

[winston]

Russia Fund up another 15%.. Looks like we have missed the bullet train

[winston]

Russia wants to influence global oil prices through output forecasts and mothballing deposits for future development, Energy Minister Sergei Shmatko said on Thursday.

Mr. Shmatko said Russia's policy would not involve co-ordinated action with OPEC states, although he said Russia admired OPEC's influence on prices and should do its part to smooth the oil price "roller coaster ride" of recent months.

Russia, the world's second largest crude exporter, sent a high level delegation headed by Deputy Prime Minister Igor Sechin, a key ally of Prime Minister Vladimir Putin, to a September OPEC meeting and has promised to do the same when the Organization of the Petroleum Exporting Countries meets in December.

Falling prices are of particular concern to Russia as its oil companies struggle to keep oil output growing and the government tries to balance its need for rising production with a policy of heavy taxation on the oil sector.

– Globe and Mail

[winston]

Siberian story
Benjamin Scent

Russian billionaire Oleg Deripaska, who turned 40 this year, first made his fortune buying up aluminum assets in Russia. He has since expanded his empire into many industries in the Russian economy, saying the best investment opportunities are in his backyard.

His future, however, may depend on China. It is the mainland's voracious appetite for raw materials that has fueled a boom in aluminum prices that is expected to continue unabated.

In 1997, when Deripaska got his start in business, the price of aluminum was US$1,507.50 (HK$11758.50) per tonne.

Since then, the metal's value has skyrocketed 66 percent to about US$2,495 a tonne. Global demand for aluminum is expected to double in the next decade.

The aluminum company he controls, UC RUSAL, recently said that China will account for more than one-third of its total aluminum sales by 2015.

UC RUSAL has also entered a strategic partnership with China Power Investment Corp to built an alumina refinery in Guinea and a smelter in northwestern China.

Forbes magazine in their May issue listed Oleg Deripaska as the richest person in Russia for the first time, with an estimated net worth of US$28.6 billion in March. He jumped up from second place to beat out Roman Abramovich, owner of the Chelsea football club, for the first time as his wealth grew at US$378 a second since Forbes put together their 2007 list. He is now listed as the ninth richest person in the world.

Deripaska raised his initial capital as a metals trader. Then, starting with an aluminum smelter in Khakassia, southern Siberia that he acquired in 1997, he built a sprawling business empire with interests in minerals, timber, power generation, construction, auto manufacturing, banking, insurance, and airlines.

It was a brutal time when Deripaska first started, as ambitious businessmen, local officials and underworld figures competed in a mad dash to gain control of Russia's resources after the fall of Communism, in what became known as the "aluminum wars."

Basic Element, the holding company for Deripaska's investments, now controls more than 100 companies operating on five continents and employing more than 300,000 people.

His businesses have grown dramatically in just the past few years, with their combined asset value more than tripling in just two years to reach US$45 billion at the end of 2007, up from US$14 billion at the end of 2005.

Basic Element, which has been around for just 10 years, says its revenues have consistently grown at a rate of more than 40 percent a year.

The man who now controls the world's largest and most efficient aluminum producer was born in 1968 in the city of Dzerzhinsk, 249 miles east of Moscow. He grew up helping his grandparents tend a humble farm located on the edge of the Caucasus mountains in southern Russia.

In 1993, he graduated summa cum laude from the prestigious Moscow State University with a degree in physics. In 1996, he received another Bachelors Degree from the Plekhanov Academy of Economics in Moscow.

Deripaska is married to Polina Yumasheva, whose father is now married to a daughter of former Russian President Boris Yeltsin. He has two children.

Among Russia's billionaires, Deripaska, along with his friend Abramovich, is believed to be among those who are closest to Russian prime minister Vladmir Putin.

Earlier this year, a one-on-one meeting between Deripaska and the Russian leader, held at Deripaska's residence in the Black Sea resort town of Sochi, was broadcast on national television, and Deripaska plans to spend US$20 billion on developments in Putin's home town of St. Petersburg.

The self-made billionaire has also cultivated ties to people of influence in the West.

Atticus Capital co-chairman Nathaniel Rothschild, scion of the storied European banking family and in line to become the fifth Baron Rothschild, has served as a financial advisor to Deripaska, helping open doors in London financial circles and playing a crucial role in some of Deripaska's largest M&A deals.

Basic Element has in the last couple years been aggressively expanding its reach overseas.

In 2007, it acquired a 20 percent stake in Magna, a Canadian company that is one of the world's largest car component manufacturers.

That same year, it acquired a 25 percent stake in Austrian construction firm Strabag and a 9.99 percent stake in German builder Hochtief.

Already at the top of the Russian business world, Deripaska has been extending his influence into the cultural realm as well.

He sits on the Board of Trustees of the world-famous Bolshoi Theatre, which Basic Element recently brought to Hong Kong to perform its signature ballet, Spartacus, for the first time in the SAR.

So what's next for the young tycoon? He is getting ready for the Olympics.

Deripaska has shown strong support for one of Putin's pet projects - turning Sochi, known as the "Russian Riviera," into the site of the 2014 Winter Olympics.

He will be investing more than US$2 billion on upgrading the Sochi airport and building facilities to be used during the Olympics.

"In my view, Russia is the best place to invest in the world right now," Deripaska was quoted as saying earlier this year. "Russia has great potential and tremendous opportunities.

[winston]

Russian Stocks Extend Drop, Led by Gazprom, as Trading Resumes
By William Mauldin

Sept. 30 (Bloomberg) -- Russia's Micex Index fell the most in two weeks, extending the worst quarterly loss for equities in the country since its 1998 debt default, after a two-hour trading suspension was lifted.

OAO Gazprom, Russia's biggest company, and OAO Sberbank, its largest bank, led the decline.

The Micex fell 6.7 percent to 951.66 at 1:08 p.m. in Moscow, bringing its loss for the quarter to 46 percent. The gauge was down 1.1 percent when the Federal Financial Markets Service called for a suspension of regular stock trading within 16 seconds of the market open at 10:30 a.m.

The dollar-denominated RTS Index slid 3.2 percent after trading resumed. Buying and selling of equities was also halted on Sept. 16, when the Micex dropped 17 percent, and again the next two days.

``Everybody's in shock, because half a year ago we still had this idea of the decoupling, that the Russian market might not be fully affected by what is happening in the rest of the world,'' said Thomas Fasbender, who manages $100 million at ParusKreml Capital Management in Moscow.

Asian and European shares earlier extended the biggest global rout in 21 years after U.S. lawmakers yesterday rejected a $700 billion bailout for the banking system. European shares later pared losses on speculation the plan may be revived.

Russia's market regulator banned all unsecured short sales of stocks for the second time this month, from 10 a.m. Moscow time. The ban will run indefinitely, Federal Financial Markets Service spokeswoman Svetlana Shvetsova said by telephone today. The regulator lifted an eight-day ban on short-selling and margin trading on Sept. 26.

Mark Mobius

Mark Mobius, who manages about $40 billion in emerging market stocks as executive chairman of Templeton Asset Management Ltd., said he may buy more Russian shares to take advantage of the declines in share prices.

Russia's government pledged to provide a further $50 billion to increase liquidity in the banking system and fight ``contagion'' that has spread from the U.S., Prime Minister Vladimir Putin said yesterday.

The RTS has fallen 50 percent so far this quarter, the second-worst performance among 88 national indexes tracked by Bloomberg and its steepest drop since a 71 percent decline in the third quarter of 1998. Foreign investors pulled $56.7 billion out between Aug. 8 and Sept. 19 this year as troops entered neighboring Georgia and investors steered clear of riskier emerging markets, according to BNP Paribas SA.

``It's the end of the quarter today, so fund managers will also be under pressure to clear out some failed bets in their portfolios and to preserve cash,'' said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow. ``That adds to the downward pressure.''

Banks Drop

Gazprom, the world's biggest natural-gas producer, tumbled 9.6 rubles, or 4.9 percent, to 184.49 rubles on the Micex. OAO Novatek, Russia's second-biggest gas producer, slumped 9.8 percent to 110.04 rubles. Crude oil retreated at much as $3.01, or 3.1 percent, to $93.36 a barrel in New York, also weighing down Russia's oil-dominated stock indexes.

Sberbank fell 1.8 rubles, or 4.5 percent, to 38.50 rubles, a third day of declines. VTB Group, the second-biggest bank, dropped 7.3 percent to 4.62 kopeks.

The slump in Russian stocks has attracted some investors looking for cheap stocks. Tocqueville Asset Management is seeking to open a Russia-focused fund within a month.

``We are actually looking to increase our allocation to Russia,'' Templeton's Mobius said in an interview. ``This market decline can be of benefit to value investors such as ourselves.''

[winston]

Mobius Hunts for Russian `Bargains' After Stock Rout (Update1)
By Torrey Clark

Sept. 30 (Bloomberg) -- Investor Mark Mobius said he's looking for ``bargains'' in Russia after a record stock market decline in Moscow.

Russia's government, with the world's third-largest currency reserves, should be able to stabilize the country's markets, creating opportunity for investors willing to ride out the global turmoil, Mobius said in an e-mailed response to questions. He didn't identify specific stocks.

``We are actually looking to increase our allocation to Russia,'' Mobius, who manages about $40 billion in emerging market stocks as executive chairman of Templeton Asset Management Ltd. in Singapore, said on Sept. 26. ``We believe this market decline can be of benefit to value investors such as ourselves and allows us to find greater investment bargains in Russia.''

A perception of increased political risk after Russia's war with Georgia and lower crude prices have helped make the RTS Index the second-worst performer this quarter among 88 markets tracked by Bloomberg.

The dollar-measured RTS has declined 48 percent since June 30, while the ruble-based Micex Index has fallen 42 percent. Templeton's Emerging Markets Fund, with holdings in OAO Lukoil, Russia's biggest independent oil producer, and OAO Mobile TeleSystems, the biggest mobile-phone company, has lost about 27 percent in the same period.

Trading Halt

Russia's markets regulator halted regular stock trading for two hours today when stocks plunged in the opening minute. The Standard & Poor's 500 Index fell the most since 1987 in New York yesterday after U.S. lawmakers rejected a $700 million rescue plan for banks.

Investors have pulled more than $57 billion out of Russia since its five-day war with Georgia last month, according to BNP Paribas SA estimates. Russia will have a ``high'' net outflow of capital this month, in addition to $4.6 billion last month, Alexei Ulyukayev, first deputy chairman of the central bank, said in an interview published in Itogi magazine yesterday.

``We believe the Russians have plenty more cash to continue to stabilize the markets if need be, so we are confident the markets will get back on an even keel,'' Mobius, 72, said.

Russia pledged more than $100 billion in emergency funding this month to support the stock market and cut borrowing costs. Foreign currency reserves, at $559 billion, are about 45-times bigger than they were in 1998, when Russia defaulted on domestic debt and devalued the ruble.

U.S. as `Emerging Market'

The global situation has reversed since 1998, Mobius said. The U.S. is ``exhibiting emerging market characteristics with heavy debts and increasing fiscal deficits,'' Mobius said. Last week, he said he doesn't see a ``long, protracted recession in the U.S.''

The main concern in Russia is how well the economy can grow and the government can rein in inflation, Mobius said. ``So far, those characteristics seem to be good.''

Inflation may reach or ``slightly'' exceed 12 percent this year after the government provides cash to the financial system, presidential economic adviser Arkady Dvorkovich said Sept 25. Russia's annual inflation rate in August was 15 percent. The financial crisis may erode gross domestic product growth by as much as 1 percentage point, Dvorkovich said. The Economy Ministry has estimated growth will be 7.8 percent this year.

Russian stocks accounted for 10 percent of the assets in the Templeton Emerging Markets Fund, 18 percent of the Templeton Eastern Europe Fund and 20 percent of the Templeton BRIC Fund at the end of August, Mobius said.

[winston]

Moscow super-rich pour millions into luxury homes By Anton Doroshev

MOSCOW (Reuters) - The world outside may be in the thralls of crisis, with house prices plunging, markets slumping and banks collapsing; but Russia's cocooned super-rich can still spare 2.5 billion roubles ($99 million) for a Moscow townhouse apartment within strolling distance of the Kremlin.

Spurred by petrodollars and booming consumer confidence, Moscow's real estate - where sky high prices can outpace Manhattan and London - has so far avoided following the local stockmarket's downward spiral, which continued Tuesday.

Property agency Agent 002 said last Friday an unnamed buyer had splashed out on the seven-storey 1,300 square meter apartment near the Kursk railway station.

"For Moscow, it's an absolute record," said Agent 002's spokesman Ruslan Barabash.

Barabash declined to identify the purchaser, but said he was an "active businessman" aged around 40 and not one of Russia's most well-known tycoons.

"It's a completely beautiful home. The design is in the 'high-tech' style," said Barabash.

The townhouse apartment, close to the Kremlin in the center of a sprawling city of 12 million people, has its own swimming pool, a children's floor and a winter garden on the roof.

NOT THE LIMIT

Although the average monthly income for Russians hovers at just below $700, a growing middle class support an active real estate market, with a smaller number of super-wealthy clustered around Moscow able to afford anything they want.

Outside some of the trendiest and most expensive restaurants in the city center and its most exclusive suburb, drivers of Bentley, Maybach and Rolls Royce automobiles can be seen idling the hours while their owners dine nearby.

"In the middle of August we observed a tendency of increasing sales for our most expensive apartments," said Barabash.

The prices are a far cry from Soviet times when Russians paid monthly rents of a handful of dollars, but lived often several families to a shared apartment or kommunalka.

Real estate analysts believe the current record could soon be broken, with demand strong at the top of the market.

"I think this is price of 2.5 billion roubles is not the limit for Moscow and in the near future there may be even more expensive sales," said property analyst Tatiana Makeeva.

[kennynah]

that kind of blizzard storms in moscow can still see their houses fetch this 99mil price tag... siao lah this fellas... better ask them to come to tropical singapore...buy up sentosa island

[winston]

Russia to Start Buying Stocks Next Week, Putin Says (Update2) By Alex Nicholson and Torrey Clark

Oct. 10 (Bloomberg) -- Russia's government will start buying securities of domestic companies next week to help support shares prices, which have fallen more than 60 percent since May.

Vnesheconombank, the state development bank, will spend as much as 175 billion rubles ($6.7 billion) of state money to buy corporate securities, Prime Minister Vladimir Putin told a government meeting at his residence outside Moscow. The same amount will be made available in next year's budget.

Russian shares have lost $615 billion of value since May, according to Bloomberg data. The average price of ruble- denominated corporate debt fell to a record low of 88.27 percent of face value today from 100.06 percent in June, according to the Micex's index of corporate bonds.

``Putin's statement should strengthen sentiment,'' Ivan Mazalov, a director with Prosperity Capital Management in Moscow, which holds about $4 billion in Russian assets. ``It's better than the government buying t-bills.''

Putin said he was responding to calls from politicians and financial experts to invest state funds in domestic as well as foreign securities. ``Taking into account what's happening on Western markets, I think these demands are justified,'' he said, without providing further details of the plan.

Micex Performance

Moscow's benchmark Micex Index of 30 stocks has lost 64 percent since it high this year on May 19, falling to a three-year low of 700.37. The market regulator closed the Micex and RTS stock exchanges today, as indexes from Asia to the Americas slumped. The FTSE Russia Index, a measure of 15 Russian global depositary receipts, fell 12 percent today to 460.18, its seventh decline in eight days.

``If the government is buying Russian assets at these distressed levels, I think they are doing what any smart investor with a long term perspective would have done,'' Marina Akopian, manager of the Hexam EMEA Absolute Return Fund in London.

The government may buy stock in state-run OAO Gazprom, OAO Rosneft and VTB Group if the shares remain ``undervalued,'' Finance Minister Alexei Kudrin said Sept. 19.

Russia, the world's biggest energy exporter, has the third largest currency reserves in the world at $546.1 billion, boosted by rising energy revenue. That includes the Reserve Fund, a buffer for the federal budget, and the Wellbeing Fund, which will finance the pension system.

The government will start delivering some of the $186 billion of pledged emergency funds to banks in ``the next few days'' as it seeks to stem the biggest financial crisis in more than a decade, Kremlin aide Arkady Dvorkovich said yesterday.