Strategies & Market TrendsInvestment in Russia and Eastern Europe

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To: copper000 who wrote (1283)6/23/2009 1:49:06 AM
From: Archie Meeties
   of 1301
Ruble is again coming under pressure.

Basically if you know where oil will trade, you can gauge your weighting in Russia.

It's economy is about the size of Italy's and the impact of a $10 change in oil prices can swing the gdp massively b/c it has a bad case of dutch disease.

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To: Archie Meeties who wrote (1287)6/23/2009 3:17:55 PM
From: Real Man
   of 1301
It seems RSX trades at great discount to oil at current prices.
I bought some today. I exited my position entirely earlier in
May, and am now averaging back in starting today. I may
have to average up, I don't know. The trend is still down, I
don't expect my first purchase to be a winner, but
I do expect higher prices than today this year, possibly quite
a bit higher.

This is a correction, not a bear, and Russia is still cheap.

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To: Julius Wong who wrote (1286)7/14/2009 8:58:13 PM
From: Real Man
   of 1301
I loaded the boat today completely. Maybe early and the boat
will start sinking, but RSX has corrected a lot of its rally.
Besides, I think oil will not go much below 60, it's a strong
support. The same is true for 18-ish for RSX. RSX will trade
above 30 this year. IMHO. Much more unrealized profits remain
in it, even though it was a bargain at 10 earlier this year.
At 30 I'll probably quit it for good - take the
profits and run elsewhere. While RSX will likely double
again from 30, it will probably take much longer - a few years.

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To: Real Man who wrote (1289)7/14/2009 10:32:51 PM
From: Julius Wong
   of 1301
Oil and Ruble are low. I also added RSX today.

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From: Julius Wong7/18/2009 8:49:43 AM
   of 1301

Mobius: Russian stocks are “very undervalued” and should be a “big holding” for investors as markets recover, the fund manager said.

Stocks in Russia, the world’s largest energy supplier, trade at less than half the price relative to earnings compared with global peers. The Micex Index is valued at 7.5 times reported earnings, compared with 16.1 for the MSCI EM index.

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From: Julius Wong7/23/2009 8:05:25 AM
   of 1301
Russian Stocks May Rally 23% More This Year: Technical Analysis
By William Mauldin

July 23 (Bloomberg) -- Russia’s RTS Index, the world’s best share index in the past six months, may rally another 23 percent this year, based on technical analysis of moving averages by New York-based Auerbach Grayson & Co.

The 50-day moving average of RTS prices climbed above the 200-day exponential average this month, representing a “bullish cross,” according to Auerbach Grayson. The index’s rally from 836, representing a 50 percent retracement from this year’s high in June and January low, signals “bullish momentum” has returned, the brokerage said.

“A resumption of the uptrend in earnest has begun,” said Richard Ross, a technical analyst at Auerbach Grayson, which specializes in emerging and frontier markets and has research affiliates in 120 countries.

The RTS is likely to “retest” the 1,180 level “by the late fall,” Ross said in an interview. The RTS fell 2.5 percent yesterday to 963.06, snapping a seven-day rally. The RTS is close to “resistance” levels at about 979 and 994, based and the 200-day and 50-day moving averages, respectively, according to Bloomberg data and Auerbach Grayson.

“Once we consolidate prices in here and move back above these moving averages, that’s going to provide the catalyst for greater upside,” Ross said.

The 50-stock RTS has climbed 15 percent after closing at two-month low of 835.23 on July 10 as speculation the global recession is easing spurred a rally in oil prices. Russia is the world’s largest energy supplier. The RTS has risen 93 percent in the past six months as oil has almost doubled from this year’s lowest close in February.

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From: Julius Wong7/26/2009 8:56:22 AM
   of 1301
Biden Says Weakened Russia Will Bend to U.S.

WASHINGTON -- Vice President Joe Biden said in an interview that Russia's economy is "withering," and suggested the trend will force the country to make accommodations to the West on a wide range of national-security issues, including loosening its grip on former Soviet republics and shrinking its vast nuclear arsenal.

Mr. Biden said he believes Russia's economic problems are part of a series of developments that have contributed to a significant rethinking by Moscow of its international self-interest. The geographical proximity of the emerging nuclear programs in Iran and North Korea is also likely to make Russia more cooperative with the U.S. in blocking their growth, he said.

But in the interview, at the end of a four-day trip to Ukraine and Georgia, Mr. Biden said domestic troubles are the most important factor driving Russia's new global outlook. "I think we vastly underestimate the hand that we hold," he said.

"Russia has to make some very difficult, calculated decisions," Mr. Biden said. "They have a shrinking population base, they have a withering economy, they have a banking sector and structure that is not likely to be able to withstand the next 15 years, they're in a situation where the world is changing before them and they're clinging to something in the past that is not sustainable."

Mr. Biden's remarks were the most pointed to date by a senior administration official on why the Obama administration believes its "reset" with Russia is likely to succeed, while previous efforts to engage Moscow by the Clinton and Bush administrations ended with little progress.

The remarks also are among the administration's most critical of Russia's current role in the world, and come just weeks after President Barack Obama insisted that the U.S. seeks a "strong, peaceful and prosperous Russia" in an address at his high-profile July summit in Moscow with Russian President Dmitry Medvedev.

Natalya Timakova, a spokeswoman for Mr. Medvedev, declined to comment on Mr. Biden's remarks. Ms. Timakova acknowledged that the Russian government is currently looking at many of the issues he raised -- including economic challenges, the banking sector and the country's shrinking population.

Despite Russia's economic and geopolitical difficulties, Mr. Biden said, Moscow could become more belligerent in the short term unless the U.S. continues to treat Russia as a major player on the international stage. He said Russian leaders are gradually beginning to grasp their diminished global role, but that the U.S. should be cautious not to overplay its advantage.

"It won't work if we go in and say: 'Hey, you need us, man; belly up to the bar and pay your dues,' " he said. "It is never smart to embarrass an individual or a country when they're dealing with significant loss of face. My dad used to put it another way: Never put another man in a corner where the only way out is over you."

Since the end of the Cold War, consecutive U.S. administrations have tried to re-engage with Moscow on a range of foreign-policy issues, in the belief that the two countries had increasingly common national-security interests. After initial charm offensives, however, both the Clinton and Bush administrations' efforts were stymied.

Mr. Biden's remarks illustrate the extent to which the Obama administration believes the balance of power is shifting toward Washington, giving the White House a new opening to leverage its strategic advantages to persuade Moscow to reduce Russia's nuclear arsenal, loosen its grip on emerging democracies on its border, and cooperate on Iran and North Korea.

"It's a very difficult thing to deal with, loss of empire," Mr. Biden said. "This country, Russia, is in a very different circumstance than it has been any time in the last 40 years, or longer."

Specifically, he said, economic troubles played a central role in Moscow's strong desire to restart nuclear-reduction talks. He noted that Russia can no longer afford to maintain an arsenal that, while much smaller than Cold War levels, is still one of the two largest in the world by far. "All of sudden, did they have an epiphany and say: 'Hey man, we don't want to threaten our neighbors?' No," Mr. Biden said. "They can't sustain it."

He also argued that Russia's domestic struggles have made it less able to influence events in its so-called near abroad -- the former Soviet republics that, to varying degrees, are seeking increased independence from Moscow.

Russia maintains thousands of troops in the northern Georgian provinces of Abkhazia and South Ossetia, and has shut off gas flows into Ukraine twice in the last three years. Despite such shows of power, Mr. Biden said, even a close Russian protectorate such as Belarus has shown signs of bucking Moscow recently.

Mr. Biden said Moscow's efforts to strong-arm former Soviet republics through use of its energy resources have backfired. He noted that Russia's running dispute with Ukraine has galvanized European efforts to build a new pipeline through Turkey and southern Europe, known as Nabucco, that would bypass Russia.

"Their actions relative to essentially blackmailing a country and a continent on natural gas, what did it produce?" he said. "You've now got an agreement that no one thought they could have."

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To: Real Man who wrote (1280)8/1/2009 1:58:33 PM
From: danbrussel
   of 1301
Yeah, that seems a little unfair, especially in light of this most recent crisis. Not to sound insane, but sometimes the one building up the massive debt needs to be the one downgraded also.

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To: Julius Wong who wrote (1290)6/23/2010 6:37:38 PM
From: Sam Citron
   of 1301
Considering adding RSX myself.
As part of my due dilgence process, planning to watch

Stanford will offer a live webcast of the visit by Russian President Dmitry Medvedev. The webcast will begin on Wednesday, June 23 at 4 p.m. PST

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To: Sam Citron who wrote (1295)6/23/2010 8:11:21 PM
From: Julius Wong
   of 1301
PEG Ratios for 22 Countries
Bespoke Investment Group

The PEG ratio is used for individual stocks as a valuation measure that factors in growth rates. It is calculated by dividing the company's P/E ratio by its growth rate. Many investors would rather own a company with a high P/E ratio and an even higher growth rate than a company with a low P/E ratio and an even lower growth rate. A PEG ratio of one or less is typically viewed positively.

A few years ago, we decided to apply the PEG ratio to various countries by dividing estimated GDP growth into the P/E ratio of the country's main stock market index. Many developed countries have low P/E ratios, but they also have low GDP growth, while developing countries may have higher market valuations as well as stronger GDP growth. Investors may find PEG ratios more useful than simple P/E ratios when determining asset allocations for various countries.

Below are the PEG ratios for 22 countries around the world. For each country, we use the trailing 12-month P/E ratio for the index shown as well as estimated 2010 GDP growth. As shown, Russia and China have the lowest country PEG ratios at 1.86 and 1.90, respectively. Russia has a very low P/E at 8 and decent estimated GDP growth at 4.3%. China, on the other hand, has a rather high P/E ratio at 19.24, but its GDP growth is also very high at 10.10%. The US is right in the middle of the pack with a PEG of 5.07. Our neighbors to the south rank just above the US with a PEG of 3.85, while our neighbors to the north rank just below the US at 5.67.

The US does have the best PEG ratio in the G-7, so US investors looking for developed country exposure might be better off staying right at home. European countries have exceptionally high PEG ratios because of their mediocre valuations and low growth rates. Australia and Spain both have negative PEGs -- Australia because it has a negative P/E and Spain because it has negative GDP growth.

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