Showing posts with label Russia. Show all posts
Showing posts with label Russia. Show all posts

Thursday, July 12, 2012

Watch for BRICs to Bottom Out

The BRICs are in a unique position at this time, as the economies of the countries are looking for bottoms whereby to build back up from.

While it's definitely not time to buy as of this writing, as a provable uptrend hasn't been engaged yet, it's important to have your investment money in the sector ready, as it appears there are attempts at a bottom forming, and you want to get in close to when that happens.

It's not good to try to find the absolute bottom, but it is good to watch and wait to see that it has sustainably bounced off their bottom and are on an upward trend.

The BRICs are wildly out of favor at this time, and justifiably so. But there is always lag time from the time an uptrend begins and traders catch on, and that's when you want to invest in the sector. If you get in too early you risk a lot of time, while if you get in too late you're always trying to chase the numbers and you'll have to pay a premium for whatever companies or funds in the sector you're looking to invest in.

The best strategy is to wait until the uptrend is ensured, but before most investors catch on.

There is no doubt about the BRICs' growth in the future, with India probably being the weakest of the bunch because of draconian regulations and laws, but overall, this group of countries are where the majority of future economic growth will be, and those getting in at the right time again will reap significant financial rewards.

Other than specific funds, it's best to look at quality blue chips companies based in China, India, Brazil and Russia, as they still have a lot of room to grow, and are almost ensured of lasting for a long time into the future.

Wednesday, July 29, 2009

Russia Struggling Most of BRIC

Russia continues to struggle most among BRIC nations

Some people have been questioning the continual inclusion of Russia among the BRIC economies, as they continue to underperform the rest during these difficult times, and Indonesia has been breathing down BRICs necks to be included among them. Maybe we'll begin to see it called BIIC if Russia doesn't turn things around soon.

China and India remain strong, with China projected to grow at a 8.4 percent rate and India a 6.2 percent rate. Brazil is also struggling with declines expected to come in at 1 percent, but that's no where near Russia's plunge of 8.5 percent.

Considering Brazil and Russia rely on commodities so strongly, it makes Russia's fall look even worse, based on direct comparisons.

The country’s natural comparison is with the BRIC countries — Brazil, Russia, India and China. In the first half of 2009, China and India have been surging ahead, while Russia’s GDP fell off the cliff by 10 percent.

Russia’s economy remains reliant by oil and gas, and its overall government policies depend heavily on the worldwide oil price. Three standard scenarios were formulated in the official Strategy 2020 program. The favored “innovation scenario” was supposed to generate an annual growth of 6.5 percent. It presupposed far-reaching reforms and investment in human capital, which is not a plausible option with an oil price above $60 per barrel.

The Kremlin’s negative “inertia scenario” assumed no significant reforms and forecasted an average growth of 3.9 percent a year. Such an authoritarian petrostate is likely if the oil price is $75 per barrel. In between, the Kremlin put an “energy and raw materials scenario” with 5.3 percent growth, which could be called status quo with an oil price of $60 to $75 per barrel, but such a policy is not likely to generate a high growth rate.

The the major thing to learn is that the higher the oil price is, the lower Russia’s long-term economic growth is likely to be, because the ruling elite will thrive on energy rents rather than pursue reforms or invest in human capital. The greater the corruption is, the more repression the rulers need to defend their fraudulent revenues.

Russia’s course is hard to figure out because overt economic policy changes every few months with the oil price. During the period from May to July 2008, the inauguration of President Dmitry Medvedev raised hopes that he would initiate economic and political reforms — particularly as it related to his anti-corruption initiatives — but we saw no important changes.

Prime Minister Vladimir Putin intimidated Mechel in late July, threatening to send a “doctor” to clean out the company’s problems, and the war in Georgia two weeks later augured a period of darkness and reaction. Russia’s attempts to accede to the World Trade Organization were suspended and a renationalization of leading companies became a priority.

But the devastation caused by the financial crisis and gradual devaluation allowed reformist ideas to surface again. Russia saw a renewed openness from February until May that could almost be labeled a thaw, but again no legislation was passed.

In early June, the oil price surpassed $70 per barrel, and the reactionaries got into action again. In Pikalyovo, Putin declared the not very market-oriented view that private businessmen have to produce for the sake of producing. Numerous governors threatened private enterprise owners with confiscation if they did not rehire workers and keep decrepit factories alive. Several weeks later, Putin suspended Russia’s attempted accession to the WTO and he even went on a personal tour to control sausage prices. Naturally, rumors are ripe of possible new confiscations of large corporations.

This is a terrible to run economic policy. In effect, Russia is pursuing the status quo or inertia scenario — but without the benefit of stability. With its quarterly swings in declared economic policy, the government destabilizes the business environment and fails to carry out any economic policy. Both the vagaries and passivity are dangerous to the country’s economy as is evident from the extraordinary fall in GDP. No wonder that not only China and India but also Brazil are much more successful.

Russia’s only sensible policy has been its fiscal policy with a persistent budget surplus in the good times from 2000 until 2008, which allowed it to build huge international reserves that, while reduced, remain at roughly $400 billion today. This means that Russia can safeguard itself from some fluctuations of the global financial market.

But it is not doing so. On the contrary, it is causing unnecessary domestic financial problems. The ultimate folly was Russia’s gradual devaluation during the period from November to January. Naturally, everybody speculated against the ruble, which meant that the Kremlin instigated a domestic liquidity freeze. It was probably the main reason for the excessively sharp drop in Russia’s industrial output. Amazingly, this operation is officially hailed as a success,ensuring that the danger of a continuation could persist.

The state-dominated banking system remains a disaster. The five dominant state banks are in horrid shape. The government pours more and more money into them, but it helps little as the banks lose it in short order on politically motivated, nonperforming loans. The state banks pose a threat of nationalizing big Russian companies, while they provide little credit. In effect, the Kremlin maintains a detrimental liquidity squeeze.

Senior officials interfere however they want to in big enterprises, asking them to hire more workers, to reduce prices and to expand production under threat of confiscation, further undermining the country’s weak property rights.

Gazprom appears to be the greatest management failure of them all. It is difficult to fathom how it has succeeded in scaring so many customers away in half a year that it has been forced to cut its output by 35 percent. In any other country, save Congo, such a harmful management would be fired without delay. There is no reason to expect any significant improvement as long as the managers remain the same.

Russia’s ultimate shortcoming is its pervasive top-level corruption. Remember that it has failed to extend its road network since 2000. A country that cannot build roads cannot develop much more.

There is no doubt that Russia will recover somewhat because of higher oil prices, the global recovery and recovering exports, but nothing has been done about the country’s profound structural problems, which have only been aggravated during a year of financial crisis. Worse, Russia’s economic policy is in such flux that nothing is being done. Gradually, the question is moving from complaints about how Russia is being governed to criticism that it is not being properly managed.

Russia continues to struggle most among BRIC nations

Thursday, February 19, 2009

Russia, China in Oil for Loans Agreement

Russia has signed up for a $25 billion deal with China to supply oil in exchange for loans to Russia’s state-owned oil firm Rosneft and pipeline firm Transneft. China Development Bank will lend $15 billion to Rosneft and $10 billion to Transneft; in exchange, China will receive 15 million tons — 300,000 barrels a day — of oil annually for 20 years.

China, the world’s second largest oil importer, is looking to diversify its supplies away from the Middle East. The deal is likely to have political significance, as Russia is looking at China and Japan as key markets for its Siberian oil fields. China has huge reserves, and is turning to Russia, Kazakhstan, and countries in Africa and South America, to ensure energy security.

Russia has won $25 billin in loans from China in return for agreeing to supply oil from new fields in eastern Siberia for the next 20 years as Moscow seeks funds to see its oil industry through the financial crisis.

Transneft, Russia's oil pipeline monopoly, said yesterday China had agreed to lend it $10 billion and Rosneft, Russia's state-controlled oil group, $15 billion in return for 20 years worth of oil supplies.

Igor Sechin, Russia's energy tsar and first deputy prime minister, told reporters as he left Beijing after the deal was signed that Russia agreed to supply China with 300,000 barrels of oil a day, for the next 20 years.

The deal, the largest trade financing agreement between the two countries, alleviates the severe refinancing needs of Russia's two state energy groups as they seek to weather the credit crisis with the country facing its first recession in 10 years. It will also provide China, the world's number two oil importer, with an important new secured supply of oil to fuel economic growth.

But analysts warned that Russia could have to divert crude supplies headed to the west in order to meet the terms of the deal as it faces a deepening decline in production this year. "There is no way Russia can deliver that amount of oil right now without taking it away from existing export routes to the west," said Chris Weafer, chief strategist at Uralsib investment bank in Moscow.

Analysts estimate Russian oil output will fall about 500,000 barrels a day this year as the country's industry faces a cash crunch because of a high tax regime, a dearth of financing and the need to invest more in east Siberia and the Arctic.

Oil output from Talakan and Vankor, two big new Siberian fields, is intended to fill the east-bound pipeline being built by Transneft, which will have a capacity of 600,000 barrels a day, and have a spur to China as well as to a hub on the Pacific.

Valery Nesterov, energy analyst at Troika Dialog, estimated the pipeline monopoly would need about $600 million to build the spur to the Chinese border.

PetroChina Co. and China Petroleum & Chemical Corp., the nation’s biggest oil producers, will benefit from China’s push to gain resources as the credit crisis prompts countries such as Russia to sell energy assets, said analysts.

Under the oil-for-loans agreement signed yesterday, the two companies will gain access to Russian oil at about $20 a barrel, said Wang Aochao, the Shanghai-based research director at UOB- Kay Hian Ltd. Oil in New York is trading below $35 a barrel. Investors should buy PetroChina shares, Gordon Kwan, the head of China research at CLSA Ltd., said in e-mailed comments today.

China, the world’s second-biggest energy consumer, agreed yesterday to provide Russia with $25 billion of loans in return for 20 years of crude oil supplies. The world’s third-biggest economy is winning deals as Russia faces its first recession in a decade and as the ruble tumbles after the global credit squeeze cuts demand for its exports.

“The slowdown in the Russian economy, declining crude prices and production and the credit crunch has lent the Chinese far better bargaining power,” Kwan said.

State oil producer OAO Rosneft and pipeline operator OAO Transneft signed the accord with China National Petroleum Corp., parent of PetroChina, in Beijing yesterday. Russia will deliver 15 million metric tons of crude oil a year, or about 300,000 barrels a day, to China for the next two decades, and build a branch from a new Siberian pipeline to the Chinese border, Deputy Prime Minister Igor Sechin said yesterday. The crude oil supply is equivalent to about 4 percent of China’s daily fuel consumption.

Delayed Pipeline

Plans to build the pipeline from eastern Siberia had been delayed because the countries couldn’t agree on the price to transport crude oil to the Chinese border. Construction of the branch link will start this year, an official from state-run China National Petroleum, who witnessed the signing of the oil agreement in Beijing, said in a phone interview yesterday.

“We believe Japan’s recession has given China the negotiating upper hand to take the lead in building the Russian oil pipeline to PetroChina’s Daqing infrastructure with more attractive terms from before,” said Kwan, who set PetroChina’s 12-month target price at HK$7.20.

Japan’s economy, Asia’s biggest, shrank at an annual 12.7 percent pace last quarter, the most severe contraction since 1974. Daqing is China’s biggest and oldest oilfield.

Russia’s economy may contract more than previously anticipated this year, Deputy Economy Minister Andrei Klepach said yesterday. The country is rewriting the budget to include the first deficit since the country’s twin debt default and ruble devaluation in 1998.

Counter Crisis

The oil-for-loans accord will help counter the global financial crisis, Chinese Premier Wen Jiabao said in a Xinhua News Agency report posted on the government’s Web site yesterday. The two nations have “great potential” in expanding cooperation in bilateral trade, investments and hi-tech development, Wen said in the report.

The agreement strengthened the “strategic relationship” between the countries and brings their energy partnership to a new level, China National Petroleum said today.

Monday, January 5, 2009

Profit Foodservice - BRIC Industry Guide Incorporates in-Depth Five Forces Competitive Environment Analysis

DUBLIN, Ireland--(Business Wire)--
Research and Markets
has announced the addition of the "Profit Foodservice - BRIC (Brazil, Russia, India, China) Industry Guide" report to their offering.

"Profit Foodservice Industry Guide" is an essential resource for top-level data and analysis covering the BRIC (Brazil, Russia, India, China) Profit Foodservice industry. The report includes easily comparable data on market value, volume, segmentation and market share, plus full five year market forecasts. It examines future problems, innovations and potential growth areas within the market.

Scope of the Report

* Contains an executive summary and data on value, volume and segmentation
* Provides textual analysis of the industry's prospects, competitive landscape and profiles of the leading companies
* Compares data from Brazil, Russia, India, and China, alongside individual chapters on each country.
* Includes a five-year forecast of the industry

Highlights

* The BRIC Profit Foodservice market grew by 6.7% between 2003 and 2007 to reach a value of $67.6 billion.
* In 2012, the market is forecast to have a value of $ billion, an increase of 9.4% from 2007.
* India was the fastest growing country with a CAGR of 8.3% over the 2003-2007 period.

Why you should buy this report

* Spot future trends and developments
* Inform your business decisions
* Add weight to presentations and marketing materials
* Save time carrying out entry-level research

Key Topics Covered:

* CHAPTER 1 Introduction
* CHAPTER 2 BRIC PROFIT FOODSERVICE INDUSTRY OUTLOOK
* CHAPTER 3 PROFIT FOODSERVICE IN BRAZIL
* CHAPTER 4 PROFIT FOODSERVICE IN RUSSIA
* CHAPTER 5 PROFIT FOODSERVICE IN INDIA
* CHAPTER 6 PROFIT FOODSERVICE IN CHINA
* CHAPTER 7 Appendix
* List of Tables
* List of Figures

For more information visit
http://www.researchandmarkets.com/research/f7c755/profit_foodservice

Source: Datamonitor


Laura Wood
Senior Manager
press@researchandmarkets.com
Fax from USA: 646-607-1907
Fax from rest of the world: +353-1-481-1716

Copyright Business Wire 2009

Monday, December 22, 2008

Research and Markets: In 2012, the BRIC Internet Access Market is Forecast to Have a Value of $ Billion, an Increase of 16.2% from 2007

DUBLIN, Ireland, Dec 22, 2008 (BUSINESS WIRE) -- Research and Markets has announced the addition of the "Internet Access - BRIC (Brazil, Russia, India, China) Industry Guide" report to their offering.

"Internet Access BRIC Industry Guide" is an essential resource for top-level data and analysis covering the BRIC (Brazil, Russia, India, China) Internet Access industry. The report includes easily comparable data on market value, volume, segmentation and market share, plus full five year market forecasts. It examines future problems, innovations and potential growth areas within the market.

Scope of the Report

Contains an executive summary and data on value, volume and segmentation Provides textual analysis of the industry's prospects, competitive landscape and profiles of the leading companies Incorporates in-depth five forces competitive environment analysis and scorecards Compares data from Brazil, Russia, India, and China, alongside individual chapters on each country Includes a five-year forecast of the industry.

Highlights

The BRIC Internet Access market grew by 22% between 2003 and 2007 to reach a value of $26.6 billion. In 2012, the market is forecast to have a value of $ billion, an increase of 16.2% from 2007. India was the fastest growing country with a CAGR of 38.2% over the 2003-2007 period.

Why you should buy this report

Spot future trends and developments Inform your business decisions Add weight to presentations and marketing materials Save time carrying out entry-level research.

Market Definition

The Internet access sector consists of the total revenues generated by Internet Service Providers (ISPs) from the provision of narrowband and broadband Internet connections through both consumer and corporate channels. Revenues generated by ISPs from other Internet related services are not included in this report. Market volumes represent total numbers of users online and exclude corporate data.

Key Topics Covered:

CHAPTER 1 Introduction CHAPTER 2 BRIC INTERNET ACCESS INDUSTRY OUTLOOK CHAPTER 3 INTERNET ACCESS IN BRAZIL CHAPTER 4 INTERNET ACCESS IN RUSSIA CHAPTER 5 INTERNET ACCESS IN INDIA CHAPTER 6 INTERNET ACCESS IN CHINA CHAPTER 7 Appendix List of Tables List of Figures

For more information visit Research and Markets
Source: Datamonitor
SOURCE: Research and Markets Ltd.
Research and Markets
Laura Wood
Senior Manager
press@researchandmarkets.com
Fax from USA: 646-607-1907
Fax from rest of the world: +353-1-481-1716

Copyright Business Wire 2008