Russia mulls raising dividend payout ratio for state-run groups to 35 per cent
Russia is casting around for ways to boost government revenues as economic growth slows amid fears of a looming recession.
One idea is to go to state-controlled companies and ask them (again) for higher dividends. Only six months ago rules were introduced obliging state-run companies and their subsidiaries to pay 25 per cent of net profits to shareholders. Now the Russian finance ministry has floated a plan to force state companies to pay out at least 35 per cent. Continue reading »
Russia: rate cut hopes fall as consumer inflation rises
Russia’s consumer inflation rate picked up in April, with the headline figure rising to 7.2 per cent from 7.0 per cent. That’s hardly hardly shocking.
But it’s still enough to make it harder for the central bank to cut interest rates to boost flagging economic growth. Its next rate-setting meeting is next week. Continue reading »
Guest post: Russia’s economy is constrained by its growth model
By Natalia Orlova of Alfa Bank
Russia’s GDP grew 1.1 per cent year on year in the first quarter of 2013, the slowest pace since 2009 when the global crisis hit. This may look decent when compared with developed countries but it is anything but impressive when looked at next to other emerging markets, particularly China and India. And while the dismal growth in 2009 was a result of the global crisis and capital flight to safety, international financial markets have recently seen an increase in risk appetite. This raises the question of why the Russian economy in particular has slowed so sharply. Continue reading »
World Cup 2018: Can Russia afford it?
The Kremlin believes that hosting prestigious international events is an opportunity for Russia to boost its international image.
But preparations for the World Cup 2018 will strain the finances of Russia’s regions and may end up shining a light on the country’s shortcomings, according to a new report by Standards & Poor’s. Continue reading »
Russia and less than $100 oil
With oil prices dropping below $100 a barrel this week Russia’s economic growth story is looking dodgy. The economy ministry has already downgraded its forecasts for full year 2013 growth from 3.6 per cent to 2.4 per cent and warned of the risk of recession. First quarter economic results released on Wednesday were mixed but not encouraging. Continue reading »
Russia: shift in tone as rates held again
Russia held its interest rates steady – again. But the central bank has further shifted its tone in its statements, becoming increasingly negative.
Last month the bank moved away from talk of the economy running close to potential, to talk of “inflation risks”. This time, it pointed to “deceleration of economic growth”. But no cuts as yet. Continue reading »
Russia: retail sales, output slow
A string of bad economic data in Russia on Wednesday.
Retail sales in February posted their slowest growth rate in three years, rising just 2.5 per cent, compared with forecasts of around 3.3 per cent. Industrial output shrank 2 per cent year-on-year.
On balance, the numbers will increase the pressure for early rate cuts. But a cut still isn’t certain as the central bank is still worried about inflation: as was announced this month, inflation rose in February to 7.3 per cent. Continue reading »
Russia: inflation fear delays rate cuts
Russia’s central bank left rates on hold at its monthly meeting on Friday – just as expected.
But, in a subtle change of tone in its statement, it dropped the references it has previously made to the economy running close to its potential, in a move which could signal future monetary easing. For some investors, cuts can’t come too soon. Continue reading »
Nabiullina: Vladimir Putin’s new broom at Russia’s central bank
President Vladimir Putin on Tuesday nominated Elvira Nabiullina, his chief economic adviser (pictured), as head of Russia’s central bank, in a move which raises concerns about the institution’s independence.
While Nabiullina is seen an ultra-bright economist/technocrat, she has little personal political clout and won’t be well-placed to resist Kremlin pressures. Investors might have preferred Alexei Ulyukayev, the bank’s hawkish first deputy governor, who has a strong record for sticking to his guns. But they didn’t get a say. Continue reading »
Central bank: ‘nearly $50bn taken out of Russia illegally in 2012′
In 11 years as Russia’s central bank governor, Sergey Ignatyev has generally kept a low profile. But he seems to have decided to go out with a bang.
In a Vedomosti newspaper interview on Wednesday, he revealed that nearly $50bn was transferred out of Russia “illegally” in 2012 and more than half the money may have been controlled by a single group of people. That sounds vague. But it isn’t. In Russia, a single group of people could only operate on this scale with the knowledge of those in power. A brave man is Ignatyev. Continue reading »
Russia: inflation jumps to 7.1 per cent, hitting interest rate cut hopes
Russia’s inflation rate climbed above 7 per cent in January dimming the prospects of an early interest rate reduction despite pressure from the Kremlin for cuts.
The consumer price index rose by 7.1 per cent year-on-year, from 6.6 per cent in December, due to increases in food and public transport prices, and in sales taxes. Continue reading »
Sberbank: a new look at Russian consumer stocks
What’s driving the Russian economy? If you believe it’s just oil and gas, think again. There’s a big consumer story going on, and it’s being overlooked.
That’s the message of a new report by Sberbank, a Russian bank, which argues that the extractive industries are overshadowing a sizable middle-class spending story that will make Russia Europe’s biggest consumer market and the fourth biggest in the world by 2020. Continue reading »
Medvedev calls for economic change as GDP figures disappoint
The slowdown in Russia’s economy has been even greater than was feared. GDP data published on Thursday show the economy grew at just 3.4 per cent in 2012, down from 4.3 per cent a year earlier, and well short of forecasts of around 3.6 per cent.
It’s the lowest rate recorded since Vladimir Putin (pictured, right) first became prime minister in 1999, except for the global crisis year of 2009. Russia has grown much richer in the past decade, but sustained broad-based economic development remain elusive, as even prime minister Dmitry Medvedev (left) admitted. Continue reading »
New blast furnace makes NLMK biggest steel producer in Russia
At a tough time for global steel markets, Novolipetsk Steel (NLMK) has established itself as Russia’s largest steel producer after bringing on stream the country’s first new blast furnace since Soviet times.
But, with steel prices weak, the extra output isn’t generating as much cash as NLMK might have hoped. The group warned of an 8 per cent drop in fourth quarter revenues and a flat Q1 2013. Continue reading »
Investors rush for Sberbank bond
How low can Russian rouble yields go? Sberbank this week raised Rbs25bn ($832m) in a 10-year eurobond issue at just 7 per cent, the lowest coupon for a Russian issuer since before the 2008 global crisis.
The yield matches the record low achieved by rival bank VTB. But that was in 2006, and for three-year money. Despite recent warnings about a possible bubble in emerging market debt, investors are clearly still bullish on the asset class and bullish on Russia. Continue reading »
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