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.
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.
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!!!