PRESS DIGEST - Russia - Oct 26
MOSCOW, Oct 26 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.
- The Chechen leader Ramzan Kadyrov has become Russia's first official to ask openly Vladimir Putin to return to his Kremlin office in 2012 and remain there "forever".
- Moscow Mayor Sergei Sobyanin has closed a meeting of the city government to journalists.
- Russia's second biggest lender, VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), is considering a possibility of inviting minority shareholders to its supervisory board.
- One of the major stakeholders in Russian steel and iron ore firm Metalloinvest, Vasily Anisimov is mulling selling his 20 percent stake in the firm worth around $4 billion, the daily says.
- Moscow city authorities are planning to issue bonds to attract at least 15 billion roubles.
- Severstal (CHMF.MM: Quote, Profile, Research, Stock Buzz) and steel maker Evraz (HK1q.L: Quote, Profile, Research, Stock Buzz) could set up a joint consortium with Yenisei Industrial Company to build a new railway route linking Siberian Krasnoyarsk with the coal-rich Tyva region.
- Russia's Gasprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) is planning to supply up to 180 billion cubic meters of natural gas to Europe by 2020, according to the company's officials.
- Russia's government is considering setting up a special political department to monitor a forthcoming parliamentary election campaign, the daily says.
- Russia is speeding up its expansion in Arctic Ocean, the daily says in connection with Russia's scientific research works in the region.
September GDP growth reported at 1.8% y/y
October 26, 2010
According to Russia's minister of economic development, in September GDP increased by a mere 1.8% y/y, putting the 3Q10 figure at around 2-2.5% y/y vs. the 3.2% y/y we expected. This makes our FY10 3.6% y/y GDP growth forecast optimistic, as the latter now requires at least 3.5-4.0% y/y growth in 4Q10.
The very slow economic growth in 3Q10 is particularly surprising given the acceleration in fixed investments in August-September to 9-11% y/y vs. 1.3% y/y in 7M10 and relatively strong consumption, as demonstrated by the 5.9% y/y increase in retail trade in 3Q10 vs. 5.3% y/y in 2Q10. The GDP growth figures seem to have been negatively affected by net exports, as according to our estimates, real exports were flat in 3Q10 vs. the 4% increase seen in 2Q10, while real import growth accelerated to 27% y/y from the already high 21% y/y level in 2Q10.
Assuming no revisions to previous figures, the unspectacular 3Q10 GDP growth calls into question our full-year forecast of 3.6% y/y, as the latter would now require at least 3.5% y/y growth in 4Q10, which is a challenge given the unfavorable base effect of 4Q09. Should economic growth in 4Q10 be similar to that of the third quarter, the full-year result will not exceed 3%.
MinFin closer to getting a tool which would help it control the borrowing appetites of quasi-sovereigns
October 25, 2010
News: MinFin plans to move from monitoring the borrowings of state-controlled issuers to actually approving or vetoing those, according to Deputy Minister of Finance Dmitry Pankin. He said that MinFin wanted to get the point across that this excessive borrowing and we have to say 'No'.
According to Pankin, the respective draft legislation is being sent for concurrence to the Ministry of Economy (MinEconomy), but at the moment there appear to be a number of disagreements.
The Head of Department of MinEconomy Alexey Uvarov explained that the draft Decree of the Government envisages the MinFin as a party that should approve voting directives for the state representatives on the Board of Directors. MinEconomy is ok with MinFin approving the borrowings part, but against it getting involved into capex, dividends and other areas, according to Uvarov (Sources: Vedomosti, Interfax).
Our View: It is not the first time the MinFin has announced its intentions to control the borrowings of quasi-sovereigns. It appears that MinFin is now actively working on getting the respective tool.
In theory, once MinFin receives desirable powers, the risk of fast leverage growth of state-controlled corporates will diminish. However, in practice one need not forget remember about the vast "political weight" of respective management teams and also the fact that not all financial transactions are subject to approval of boards of directors.
Anyway, the news should be welcomed by the holders of Russian quasi- sovereign bonds as it implies stronger control over leverage and FX risks as well as new debt supply in wholesale capital markets.
Business, Energy or Environmental regulations or discussions
By Yuriy Humber
Oct. 26 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.
Russia’s 30-stock Micex Index rose 0.6 percent to 1,528.24 at the close in Moscow.
OAO GMK Norilsk Nickel (GMKN RX): Copper rose to the highest price in 27 months in New York and London as the dollar weakened amid speculation the Federal Reserve will announce further bond purchases next week. The metal touched $3.8895 a pound on the Comex exchange. Norilsk, Russia’s biggest copper producer, rose 2.8 percent to 5,613.08 rubles in Moscow on the Micex Stock Exchange.
OAO Rosneft (ROSN RX): Crude oil rose for a second day as the dollar slumped to a 15-year low against the yen, bolstering the appeal of raw materials as an alternative investment. Oil futures in New York were 2.9 percent higher than a year ago. Russia’s largest oil producer fell 0.2 percent to 216.98 rubles in Moscow on the Micex Stock Exchange.
OAO Sberbank (SBER03 RX): The dollar dropped to a 15-year low versus the yen after a Group of 20 pledge to avoid “competitive devaluation” failed to dispel bets that the Federal Reserve will debase the greenback by announcing more bond purchases. Russia’s biggest bank and biggest stock by trading volume rose 0.4 percent to 102.36 rubles on the Micex Stock Exchange in Moscow.
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Last Updated: October 25, 2010 22:00 EDT
October 26, 2010 11:52