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Market Opinion

by Kathy Penchuk

Monday, March 13, 2000

Just in Time for the Conference at the Plaza 

Optimism is a commodity of dubious value when it comes to Russian capital markets, but I think we can all allow ourselves the tentative conclusion that enthusiasm for Russian paper is on the rise.   Don’t dust off your Yakutian agrobonds just yet, but note that headhunters are on the prowl for salespeople, a few expats have actually returned, and the most bullish are claiming that “it’s just like it used to be.”

This slow appreciation (it’s Russia, think long-term) started with the oil and gas sector (clear benefactors of the global energy price rise), whose companies, when fairly (okay, okay) valued, dominate the market cap and which, when you can make them pay, represent the bulk of Russia’s corporate tax revenues. 

Somebody will make this sales pitch eventually, if they haven’t already, so allow me to start it or chime in:   now that we have the latest emerging market within this emerging market  -- Russian e-business -- isn’t there something about needing phone lines that actually work, so think macro, all that ebusiness money getting funneled into all those svyazinforms to upgrade all those nasty old phones lines, internet start-up entrepreneurs meet emerging market, picture the higher charge per user, millions of potential users – you get the picture.  Buy AnythingHyphenSvyazinform.

Good thing we have the collective anxiety attack about ADRs to stanch any excess giddiness.  I like the theories:  the neo-fatalistic (it’s Russia, so anything can happen); the guilt-by-association (Bank of New York did some bad things, so maybe its ADRs are bad too); the petulant (ADRs were nothing but investment zakuski for Wall Street); and the requisite Chubais conspiracy.  Sorry if I forgot yours.   Hedge your ADRs with your RDRs. 

Misc:   Does anybody really think that Putin is going to take on all the oligarchs and Boris Berezovsky too?  Hello?

Kathy Penchuk,
New York City
email: KPenchuk@hotmail.com

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