2017年6月26日星期一
 
專家論市
Martin Hennecke
Martin Hennecke
Chief economist at The Henley Group mwh@thehenleygroup.com.hk
"In light of events surrounding the crisis on the Crimean peninsula, White House spokesman Jay Carney on March 18 made the following recommendation: "I wouldn't, if I were you, invest in Russian equities right now, unless you're going short.""

Ukraine-Russia tiff: turning crisis into opportunity
31/03/2014


In light of events surrounding the crisis on the Crimean peninsula, White House spokesman Jay Carney on March 18 made the following recommendation: "I wouldn't, if I were you, invest in Russian equities right now, unless you're going short."

Interestingly though, while Carney was speaking the market rose, not being too impressed with his words.

Subsequently though, some investors seem to have been picking up on the comments and wondering what to make of them.

In this regard we should first ask, with a calm mind, whether or not Carney actually can be fully trusted to give qualified and entirely impartial advise on this type of investment - being neither an economist nor independent from the government he represents.

It appears more likely for him to say such things because he or his government has got an ax to grind politically with Russia rather than be concerned about investor returns.

If he was impartial and commenting purely from a financial angle, he should have at least pointed out that Russian equities are currently trading at a price-to-earnings ratio of five and a price-to-book ratio of 0.65 (compared with a P/E of 17 for US stocks).

Any serious investment adviser can see shorting would be extremely risky - to say the least.

Indeed, if anything, current valuations would rather typically indicate a once-in-a-lifetime opportunity to buy into some huge, cash-rich, high dividend paying successful multinational companies at ridiculously low prices.

Yes, further sanctions against Russia by the European Union and United States would be a potential risk and threat.

But Europe exports more goods to Russia rather than the other way around.

Also, since natural-gas exports from Russia to the EU will be harder to replace - at least anytime soon - than manufactured goods exported from the EU to Russia, it seems Europe is just as dependent on Russia as Russia is on Europe.

Many of the items Russia now imports from Europe can be easily sourced from China. Hence, economic sanctions do not appear all that likely.

China and India have indicated they see recent events in Crimea - which this month voted in a referendum to secede from Ukraine and join the Russian Federation - very differently than the West.

In the meantime, Sino-Russian relations continue to grow. During Russian President Vladimir Putin!|s upcoming visit to Beijing in May, we are likely to see the signing of a very large natural gas deal.

This contract may dwarf any previous deals between the two countries.

Also, talks between Moscow and New Delhi on expanded oil and natural gas supplies - via shipped LNG - to India are also being discussed. A new deal with either China or India could trigger a Russian market reversal once announced.

And although Japan talks tough - presumably with some US prompting - at the end of the day the country is also highly energy import dependent, as is South Korea. Both Asian economic powerhouses have been seeking to expand energy imports from Russia as well.

Hence, any investor able to tolerate high volatility with a part of their portfolio and entering some position in Russia at this point may be very handsomely rewarded down the road.

Perhaps even more significantly, US policies of sanctions and threatened sanctions may backfire as Russia and its Asian trading partners reduce reliance on US financial institutions and the dollar itself for trade and currency reserves.

This could threaten the currently still unquestioned status of the dollar as a reserve currency.

Just the fear of reduced use of the greenback in global trade may already have a major impact on the dollar exchange rate as the US debt problem continues to worsen.

In turn, this development would likely also be supportive of gold, noting that the metal currently still trades at a very attractive/low price of around US$1,295 (HK$10,101) per ounce, having corrected significantly from the high of US$1,918 reached in 2011.
 


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>> Ukraine-Russia tiff: turning crisis into opportunity - 31/03/2014
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