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Open Joint Stock Company Long-Distance and International Telecommunications Rostelecom Message Board

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  • bardinja bardinja May 7, 1999 10:05 AM Flag

    Russian shares edge up by close, optimi

    Hi kathi17, Finance_Guy, jimczar, ddog, wrbt,
    gazprom, et. al.!

    I have just come back to this
    board (as of last week)! From February to last week, I
    had not even looked at my stocks. Last week I looked
    at my stocks again, because with the drop in ROS to
    3 or so in early April, my sister said she was
    concerned. (I had recommended to her to buy some ROS, so she
    bought a little bit of it around December or January. My
    sister's daughter's boyfriend also bought some, but sold
    it when it went down in early April!)

    Was I
    in for a pleasant surprise last week! I looked at an
    oil driller thread (I don't own any oil drillers now
    but I look at that thread) and someone said that this
    has been
    the biggest and fastest rise in history
    for them! I had felt that oil prices would eventually
    recover,
    but I never expected that they would recover this
    dramatically!!! I looked at my Russian oil stocks and saw that
    they had also gone up dramatically! I caught up on a
    lot of posts on this and other message boards. I saw
    that ROS was still at around 4 last Wednesday or
    Thursday, so it was lagging. So I bought some more ROS at 4
    1/4 the next day.

    I then emailed my sister the
    following:

    (continued)

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Hi Jane!

      In response to your concern, I
      have looked at what is going on with my stocks,
      especially Rostelecom. I am more optimistic than ever now
      about Rostelecom!!! Much has changed in the last 2-3
      months. Here is why I am so optimistic:

      1. Oil
      prices have skyrocketed back up!!!! I knew this without
      even looking at my stocks, from looking at prices at
      the gas pump! Prices for crude oil have gone back up
      about 60 or more percent! This was one of the things
      that I had felt would be inevitable. Oil Prices
      through January 1999 went down more than at any time
      since 1900! I felt it was only a matter of time before
      they would go back up. Oil companies can't survive on
      $10 per barrel oil.
      2. How does this affect
      Russia? Big!!! About 50% of Russia's tax revenue is from
      its oil and gas companies. This is far more than
      Mexico's 20%. Mexican stocks have rallied big on this
      news. It is only a question of time before all of
      Russian stocks will. In fact, Russian oil stocks (Lukoil,
      for example, which I told you about) already have
      gone up sharply! Lukoil has gone up from $17 where I
      bought it to $32! The whole Russian crisis and default
      last summer was due to the collapse in oil prices. Now
      with oil back up, we will see the situation reverse
      itself.
      3. The IMF I believe has just agreed to provide
      Russia with a loan of $3.5 million. This opens the door
      for the World Bank and others such as Japan to also
      provide loans, which they were waiting for the IMF
      approval before so doing. In December or January, Russia
      was put in a status of 'selective default' by credit
      watch agencies, and because a company's securities
      cannot have a higher rating than that of the government
      the country is in, this status carried over to
      Russian companies generally. With these loans, Russia
      should be taken off the 'selective default' category,
      opening the way for institutions to begin investing in
      Russian equities.
      4. The Asian meltdown is pretty much
      over. Money is flooding over to Asia again. Korea's
      stock market has led the way. A Korean fund that I was
      in has gone up from $1.75 to $5.75. With people
      seeing that money is to be made in emerging markets
      again, it is only a question of time before money starts
      pouring into Russia again.
      5. The situation in Brazil
      has seemed to improve since January, at least based
      on the rally in stock prices there (up about 50% in
      the Brazil Fund that I am invested in). This was a
      major damper on emerging markets in general, when
      Brazil had a currency collapse in January and a
      mini-stock market crash. Money seems to be flooding back not
      only to Asia but Latin America as well. And I believe
      this is only the beginning of it. Huge rallies usually
      happen for good reason and are the portent of further
      sustained rallies in the months and years to follow. In
      other words, this seems to be the beginning of a bull
      market for emerging markets in general, including
      Russia.

      (continued)

      • 1 Reply to bardinja
      • 6. Mark Mobius, the top emerging markets fund
        guru, has said that he believes that Russia will be the
        best performing emerging market this year. He manages
        the most highly respected funds in the U.S. invested
        in emerging markets today, in the Franklin Templeton
        Fund family. Dad was a big admirer of John Templeton,
        who started those funds many years ago. John
        Templeton, by the way, also invested in Korea last year
        (January 1998), when prices of that Korea Fund were around
        $2.00 - $2.50. I only wish I had kept my Korea Fund
        longer.
        7. Rostelecom has not participated in the latest
        rally in Russian stocks, which has been led by Russian
        oil companies like Lukoil. My understanding is that
        this is for two reasons: 1) It is only natural that
        oil companies should lead the market, since this
        whole rally has to do with oil prices. People who look
        at oil prices naturally will buy oil companies
        first. When institutions and people in general start
        recognizing the link between Russia and oil, and when every
        magazine article starts talking about this and start
        saying how Russia has gotten over the crisis and is
        doing very well now, it will be too late to make much
        money buying Russian stocks, because by the the HUGE
        rally that I believe we are now seeing the beginning of
        will be over!!! 2) Rostelecom's price is temporarily
        depressed by uncertainty regarding its merger with the
        holding company Svyazinvest. Some feel that this may be
        more good for Svyazinvest than for Rostelecom, but I
        am not terribly concerned about this. Rostelecom is
        still incredibly undervalued, and I believe will make
        lots of money in the coming years. It is far below
        book value, and I believe will show tremendous
        earnings once the situation in Russia improves. Earnings
        will also improve due to appreciation of the Russian
        ruble.
        8. When oil revenue starts coming in to government
        coffers and Russia gains more and more foreign currency
        reserves (dollars, euros, etc.) through earning far more
        money from higher oil prices, the Russian currency will
        reverse itself and begin appreciating against the dollar.
        In August of last year, the ruble collapsed from 1
        ruble to $6 to the present 1 to $24. Once Russia's
        foreign currency reserves go back up the ruble will
        reverse, maybe not all the way back to $6 but a good ways.
        This has already happened in other countries. In
        Indonesia, for example, the currency went from 1 to $2.50 to
        1 to $18 and then back to 1 to $7.50, even before
        the current rise in oil prices. Indonesia is an Asian
        country and also an oil exporting country, so the
        Indonesian currency may well continue to appreciate.
        9.
        People say that Russia's love affair with the West may
        now be over, and that Russia will go back to some
        form of statism. Well, Russia is bordered not only by
        a stronger Europe with a now common currency on the
        West, but a newly capitalistic China on the East. China
        is now like a boomtown! I met two people from
        Shanghai at a dance last week. I now read that Shanghai is
        like Chicago, with hundreds of new tall buildings
        built in the last several years! New subway systems,
        new train systems featuring European and Japanese
        style fast trains (an essential for a dense population
        such as China's) are being built in China like never
        before. Look at www.quote.yahoo and pull up GSH
        (Guangshen Railway), one of China's premier railways in
        Guangshen Province bordering Hong Kong and read some of the
        messages on it. Russia cannot afford to be left
        behind.
        10. Russia's government, even though now ruled by a
        former communist Prime Minister Primakov, has no
        intention to go back to the Soviet era. There are hundreds
        of thousands of small businesses in Russia now, the
        younger generation has no desire to go back!!!

 
ROSYY
14.790.00(0.00%)Jul 30 1:40 PMEDT

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