Russia after the election: business as usual
Russia's presidential election has played out largely as the opinion polls had augured, with Vladimir Putin winning convincingly. The gap between him and Gennady Zyuganov, who came in second, was too large to be attributed to voting fraud, which some opposition leaders - both inside and outside the political system - have pointed to. Last week, Putin confirmed that, if elected, he would appoint Dmitri Medvedev as prime minister. That said, we do not expect any significant political change in Russia in the near term.
EM FUNDS EXCEED $20 BLN YTD, RUSSIA A PREFERRED ASSET
Investor confidence in EM returns. After taking a brief pause for reflection the week before last, investors accelerated new money flows into emerging market funds this week. According to data compiled by EPFR Global, investors added $1,043 mln of new money into all EM funds in the week to Wednesday, which is up from a net inflow of $355 mln the previous week and brings the total net inflow YTD to $20.7 bln. Over the same period last year, investors withdrew $13.7 bln from all EM funds, as the outlook for 2011 looked bleak. This year's reversal reflects the much greater level of optimism that developing economies can withstand any contagion from Europe's debt problems and deliver much higher growth than the developed economies.
STRATEGY WEEK AHEAD - DEJA-BOOM, OR DEJA-BUST?
The four most dangerous words in investing are "This time it's different".
Sir John Templeton
Putin delivers clear-cut victory. Vladimir Putin's victory with a projected 64% of the vote is not far off that forecast by various opinion polls over recent weeks. This should help draw a line under the protest movement in its current form, which should be greeted with relief by investors. But the outcome is mostly priced in already, and, as expected, after a short relief bounce, there was no significant impact on equities this morning. Weaker trade across Asian markets as a result of China guiding lower economic growth this year will have more of an impact. Attention will quickly switch to who will be appointed to the key positions in the next government and how Putin can deliver on promises made during his election campaign without busting the budget or further raising the economy's dependency on the oil price.
Putin wins presidential election
Vladimir Putin secured a third term in the Kremlin on Sunday after recording a resounding victory at Russia’s presidential polls amid allegations of electoral violations. "We won in an open and honest fight!" a jubilant Putin, flanked by outgoing President Dmitry Medvedev, told a crowd of tens of thousands of supporters at a rally in downtown Moscow. "We urge everyone to unite around the interests of Russia."
Under the eye of observers and web cams Russian voters go to the polls
Russians began voting on Sunday to elect a president for the fifth time in the nation’s post-Soviet history, the first in which the president will serve a six-year term, and not four years as previously.
Five candidates - Prime Minister Vladimir Putin, Communist leader Gennady Zyuganov, nationalist Liberal Democratic Party head Vladimir Zhirinovsky, A Just Russia Party leader Sergei Mironov and the only independent, billionaire Mikhail Prokhorov - vie for the Russian presidency in the March 4 vote.
Darkin replaced as Primorye Governor by academic in Russia's far east
In a bust-up that owes as much to Sunday's upcoming vote for a president in Russia as allegations of corruption in the run up to the APEC summit to be held in his bailiwick, Prinorye Governor Sergei Darkin, whose fiefdom embraces the Pacif port city of Vladivostok, was ousted this week and repklaced as acting governor by the rector of the Far East University.
America's failed Russia policy
by Stephen F. Cohen
Huffington Post, Feb 28, 2012
The United States and Russia are at a potentially fateful crossroads in their relations. Twenty years after the end of the Soviet Union, the relationship features more elements of cold-war conflict than of stable cooperation. Still more, recent developments, including presidential campaigns and other political changes under way in both countries, may soon make relations even worse.
Mechel and its bizarre instrument, the prefs
Mechel’s preferred dividend yield story for 2011 does not seem to be playing out well. With a $300 mln forex loss reported in 3Q11 and likely weak 4Q11 figures, the company should end the year with around just $670 mln in net income. This implies an annual dividend of $0.96 per share ($0.48 per ADR), yielding 11%, but any payment might be contingent on the goodwill of lenders. We still call for a re_rate of the prefs, as the 26% discount to commons (on the locals) appears excessive, but the timing is unclear. With Mechel’s funding position will remain most precarious with earnings falling in 2012. We maintain our HOLD recommendation on the stock but think that the prefs offer better exposure in any case.
Russian homebuilders - still time to ride the recovery
We do not think it is too late to buy Russian homebuilders, which offer a great combination of growth and relative value compared with both local consumer plays and global homebuilders. We see further upside of 44-141% for the stocks but caution that performance will depend on the market's direction, as we doubt that traditionally high-beta real estate names will de-couple from the market. We like LSR Group locals (141% upside), as they offering the best value for growth, and Etalon Group (45% upside) as the most defensive name. We would also keep an eye on PIK Group (44% upside) for any signs of a turnaround.
Shuvalov urges McDonalds to open in Vladivostok
Russian First Deputy Prime Minister Igor Shuvalov has called on McDonald’s, Russia’s most popular fast food chain, to open outlets in the Far East. “We have no McDonald’s in Vladivostok and I would like it to appear there,” Shuvalov said in Kazan in the Volga Republic of Tatarstan on Wednesday, during a sponsorship agreement signing ceremony for the 2013 Student Games.