Monday, September 14, 2009

Russia On Sale

"Russia's economy contracted 10% in the first quarter of 2009, driven down by weakening commodities prices and a 24% plunge in manufacturing output. Economics Minister Elvira Nabiullina recently said Russia's GDP might fall as much as 8% this year. ... 'Have a crisis in the US, and it's really a crisis. People are not accustomed to it,' says John Derrick, director of research at US Global Investors, a San Antonio, Tex. firm that manages $2.1 billion in 13 funds. 'In Russia there's a different mentality. Crises are just part of the cycles of the last 20 years.' ... Since August 1998 the ruble has fallen 81% against the dollar. In May net portfolio investment in Russian funds from overseas was one-tenth of that into China and one-sixth the amount entering Brazil, despite Russia's superior market performance. ... Liam Halligan, chief economist ar Prosperity Capital Management, a London firm overseeing $2.8 billion in the Russian market ... notes that Russia sits on some of the world's richest veins of natural resources--oil, gold, and iron ore--and expects them to rise in value as a flood of Western currencies unleash global inflationary pressures. Russia's stock market capitalization, at $484 billion, is valued on a par with Pakistan's or Jordan's. To Halligan it's insanely cheap", Richard Morals at Forbes, 3 August 2009.

I agree with Halligan, Russia looks cheap to me. Disclosure: I own shares in Russian-oriented mutual funds.


Anonymous said...

Sure... you talk about investing in Russia like it's investing in the US...

I know one of the American guys who was first in running money in Russia... horror tales... you bet... what shape is the auditing and accounting profession in there?

You may have great wealth in a nation but if the financial and banking infrastructure is not fair and transparent how you gonna invest?

Anonymous said...

@ Anonymous that sounds like America.

Saoirse said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.