There is no doubt that emerging market (EM) investors have cheered up considerably of late. Following a torrid January and February, virtually all asset classes in the EM universe appear – on aggregate at least – to be gaining in value.
The bellwether stock index, the MSCI EM index, is up 9.6 per cent from its low on February 5. EM sovereign bonds are yielding an average of 5.51 per cent, down 0.37 per cent since January 1. Local currency bonds are, in many cases, producing stellar returns sharpened by windfall currency gains. Indeed, some EM currencies are among the world’s best performers, with the Indonesian rupiah rising 7.81 per cent, the Brazilian real gaining 7.3 per cent and the Indian rupee climbing 2.8 per cent so far this year. Continue reading »
Russia’s Sukhoi Civil Aviation has reached a preliminary agreement to supply up to 100 Superjet-100’s to China in what would be by far the biggest sale yet of its flagship regional passenger jet. Apart from swelling Sukhoi’s order books, a Chinese deal could help Russia circumvent possible western sanctions.
Sukhoi Civil Aviation signed a memorandum of understanding (MOU) to sell up to one hundred Superjet-100s to O’Bay Aircraft, a privately held airline based in Henan province in north China. As part of the deal, the two sides are considering a joint assembly venture to make SSJ-100’s in Zhengzhou, the capital of Henan province. Continue reading »
A wave of patriotism is sweeping Russia following the annexation of Crimea. But will the euphoria last long enough to have Russians invest in the Black Sea peninsula and support the local economy by holidaying there? Dmitry Medvedev, Russia’s prime minister, chaired a government meeting on Monday to discuss how to make Crimea a going concern.
It sounds like a daunting task. The Kremlin took a huge risk when it redrew the map of Ukraine last week and took possession of Crimea. Western powers have condemned the move as a land grab and are threatening Russia with painful sanctions and decades of international isolation. Continue reading »
The Ukraine crisis has entered its “wait and see” phase. Does this mark the beginning of a peaceful resolution or is it the calm before the storm? Have investors embarked on a relief rally, or is the dead cat bouncing?
There were opinions to match all tastes from market analysts on Wednesday. Here is a beyondbrics summary of those views, from “Crisis? What crisis?” to “Cold War 2.0″. Continue reading »
By Vladimir Kolychev of VTB Capital
Russia’s economy did not ring in the New Year optimistically. Both structural, related to exhaustion of the previous growth model, as well as cyclical headwinds, including budget consolidation and slowing consumer demand to name but two, have proved significant drags on growth.
And after four IMF growth forecast cuts, a struggling labour market, uncertainty in commodity and oil & gas prices and stagnating investments, Russia’s economy could be likened to an aircraft slowing to stall speed – the speed below which an aircraft can no longer maintain level flight and starts to descend. How then can Russia’s economy weather the storm in 2014 and avoid stall speed? Continue reading »
The 5th in our series of guest posts on the outlook for 2014 is by Chris Weafer of Macro-Advisory
In economic terms 2013 was Russia’s Annus Horribilis. From growth of 3.4 per cent in 2012, and early expectations of a repeat performance this year, the economy is much more likely to report growth of only 1.3 per cent. That is still a good number in global terms but a long way off the 4 to 5 per cent growth that the country actually needs. A second consecutive year of poor growth will feel like stagnation and lead to a raft of earnings forecast downgrades in companies exposed to the domestic economy.
The good news is that the President and his Kremlin advisors are finally starting to pay attention. Continue reading »
Luxury shopping: not as popular as it was
By Ben Aris of bne
A Russian joke from the 1990s: Two Novy Russkis meet on the street. “Nice tie,” says the first. “How much did it cost?”
“Its Hermes,” says the second. “It cost a $100!”
“You’re crazy!” says the first. “I know where you can buy the same one for $200!” Continue reading »
Should Russians worry more about the budget deficit? Looking at government figures for last year, it is not clear that they should.
The country’s federal deficit was 0.1 per cent of output in 2012; public sector debt was 12.5 per cent of GDP, enviable by western standards.
But a new research paper from economists at the Gaidar Institute and Ranepa, two think tanks, suggest Russia’s total obligations are much more extensive than they appear in the official data. Continue reading »
Russia and Vietnam signed a raft of economic agreements on Tuesday that will strengthen their strategic partnership and counter rising Chinese influence in southeast Asia.
The deals, signed during a visit by Vladimir Putin to Vietnam, will see Russia step up involvement in Vietnamese energy markets and help boost security in the country that has been a close Kremlin ally since Soviet times. “Vietnam has been a long-term, trustworthy partner for Russia and the political dialogue between the two countries is at a high level,” Putin told reporters after talks with Truong Tan Sang, his Vietnamese counterpart. Continue reading »
A mixed picture for the prospects of an economic recovery emerging Europe, according to Monday’s forecast from the European Bank of Reconstruction and Development.
The EBRD found that the more advanced countries of central Europe will probably do a bit better than expected next year, while the rest of the post-communist region is sputtering. Continue reading »
By Oleg Deripaska
A year on from Russia’s accession to the World Trade Organisation it’s clear that realising the benefits of membership will be a marathon rather than a sprint. Anyone who expected the WTO to suddenly plug the gaps in Russia’s growth story will have been both unrealistic and disappointed.
It’s obvious that the WTO is not a club of smiling, friendly people; it’s a swimming pool full of sharks. However,what doesn’t kill us makes us stronger, so to survive and grow as a WTO member, we in Russia need to increase our own competitiveness, cultivate our domestic market and realise our export potential. Continue reading »
So, Russia is considering price freezes to provide some relief for stretched household budgets and get the country’s economy going again. Investors are likely to be dismayed. Ordinary Russians should be, too. Continue reading »
Russia’s central bank kept rates on hold on Friday – the 11th month in a row. Is that such a big deal?
Yes, argues Renaissance Capital’s Ivan Tchakarov. It should be cutting rates now. The bank’s doveish tone is all very well, but it should be acting on where it thinks inflation will go, not where it is currently. Continue reading »
The Russian central bank’s new loan facility was hailed as “a form of quantitative easing” by the country’s economy minister on Tuesday. As beyondbrics reported, other analysts agreed and expected it to be followed by more measures to ease liquidity conditions in an attempt to revive growth in Russia’s sluggish economy.
But not everyone involved sees it that way. Continue reading »
As the US Federal Reserve threatens to bring its quantitative easing programme to an end – and with it one of the drivers of EM growth in recent years – Russia is preparing to introduce its own brand of QE in an attempt to keep growth going.
The central bank plans to auction loans collateralised by non-marketable assets in a bid to inject liquidity into the economy and cut the cost of funding for banks and borrowers. Continue reading »