Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

[Sapiens]

http://www.bloomberg.com/apps/news?p...d=aseDeg1dBbX8

Dec. 1 (Bloomberg) -- Russia’s stocks fell for a second day and the ruble dropped to a 2 1/2-year low against the dollar after a report showed a steeper decline in manufacturing than during the 1998 financial crisis.

...

“With growth going down and the credit situation as it is, new orders for Russian companies will be suffering,” said Peter Westin, an equities strategist in Moscow at JPMorgan Chase & Co. “For Russia, the news flow is very negative at the moment.”

...

[D-Mack]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98







Roubini suggests devalueing the Ruble

[phirang]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

Russia is completely hosed.

Trade accordingly.

[rj1]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

well, c1ue's f*cked.

[metalman]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

well, c1ue's f*cked.

russia's fucked. their 'leaders' should have invested oil $$$ into the econ.. to make sutff... while they had it. too bad! bye, bye russia! although with all your nukes i bet we'll be hearing from you!!!

[c1ue]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

Actually, what is being described is true, but the reasons are not being understood.

What is happening is what I hoped: the Russian government is using this crisis to squeeze the present crop of oligarchs.

Even the Economist has gotten wind of what is really happening:

http://www.economist.com/specialrepo...ry_id=12627970

“The crisis itself is less grave than the potential consequences of the government’s actions in solving it,” says Andrei Sharonov, a former deputy economics minister who now works in the private sector. The government has earmarked a total of more than $200 billion for various rescue measures, which as a proportion of GDP is almost three times what the Americans are spending. But in contrast to America, there is little public scrutiny of what the money goes on. The first victims to be rescued by the government were two banks said to be closely linked to senior government officials.
To unblock the banking system, the government deposited $50 billion in three banks, two of which are state-linked. The third used to be controlled by Gazprom and is now owned mostly by private individuals. The idea was that the banks would inject liquidity into the system, but in the event they did not lend the money on to other banks, so now the government decides whom they should lend to.

Another $50 billion of the rescue money was earmarked for bailing out “strategic” companies. At the front of the queue were Russia’s largest oil and gas companies, including the state-controlled Gazprom and Rosneft. Igor Sechin, the powerful deputy prime minister in charge of energy, seems to have promised $9 billion of government money to energy companies. Half of it will go to Rosneft, which has a debt of $20 billion that goes back to its controversial takeover of the Yukos oil company. Mr Sechin is also the chairman of Rosneft and, says Mikhail Khodorkovsky, the former boss of Yukos (and now in jail), the man who destroyed his company.
Next came electricity companies, carmakers and anyone else who could think of a good reason to ask for help. As one Russian oligarch observed, a lot of people in the Kremlin would like to take back the companies that were privatised in the 1990s. Back then the oligarchs lent money to the cash-strapped state and got assets at knock-down prices in return. Now it is the companies that are in debt, whereas the state is cash-rich and can buy the assets back cheaply. To make them even cheaper, government officials publicly threaten companies or dig out old charges against them, as Mr Sechin has recently done with one of Russia’s largest fertiliser producers

It is becoming better understood among the population that the plan is to destroy the old crop of oligarchs and raise a new one.

Of course it is completely possible that the new crop will be equally as bad as the old crop. But it is unlikely. For one thing, the old crop wanted to sell their physical assets to foreign companies, take their money and run. The new crop may, of course, make the mistakes of underinvestment etc. - but at least there is some hope that the outcome will be an AramCO (vs. Yukos).

As for my investments - the 10% hit I've taken on the ruble vs. dollar cross has been equalized by the 11% interest rates for bank deposits in Russia as well as continued strength in the businesses I've started there.

Hard to lose money when payback for investment was 3 months, and I started in June...

I do expect short term further weakness in the ruble/dollar cross, but ultimately I await the dollar collapse to see if I've made a mistake leaving the profits in Russia.

How have bank deposits done here in the US? Both absolute and purchasing power wise?

Most importantly, not in dollars. Not in US.

But it is too early to say still - time will tell.

[rj1]

Re: Russia: Stocks, Ruble Drop as Production Falls More Than in ’98

russia's fucked. their 'leaders' should have invested oil $$$ into the econ.. to make sutff... while they had it.

they were based on everything I read