Russian Economy General News: #11

PhSt wrote:A winter of Kremlin’s content: Construction boom shows doomsayer ‘experts’ wrong on Russia

https://www.rt.com/op-ed/473021-russia-construction-boom-predictions/

Arrow wrote:Russia should become the 5th economy of the world this year, chasing Germany. In the perspective of the next 10 years, it should be the 4th world economy before Japan.

Arrow wrote:Russia should become the 5th economy of the world this year, chasing Germany. In the perspective of the next 10 years, it should be the 4th world economy before Japan.

Viktor wrote:The thing is that all along every plan Russia has thinktanistan attacks with suspicion, disinformation, doubt, discredit, misinterpretation, scorn, ignorance by articles publishedmeant to persuade people into something which is not.

calripson wrote:Interest free? That is so old school. How about negative interest rates? That's the future and present. Just check out Japanese or German government debt.

andalusia wrote:I don't understand why all countries in the world simply don't issue their currencies interest free? It is the best solution.  The US before the American Revolution issued Colonial Script and during during the Civil War they issued the interest free Greenback. A country can finance its infrastructure and other needs without borrowing from the IMF, World Bank or even China.  The colonial US, Lincoln's America and Nazi Germany are good examples of this. I think Russia should seriously consider issuing the ruble interest free.

To see the effect of debt-free currency, We can use examples in history to illustrate the point.

   

  1. * The Saracen Empire forbade interest on money 1,000 years ago, and its wealth outshone Saxon Europe.

  2. * Mandarin China issued its own money, interest and debt-free. Historians and collectors of art today consider those centuries to China's greatest time of wealth, culture and peace.

  3. * The American Colonies issued Colonial Script, and Ben Franklin explained to the English that this was the key to the prosperity Colonies.

  4. * Abraham Lincoln did it in 1863 to finance and win the Civil War.

  5. * Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a World power in 5 years.

Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took nearly the whole Capitalist and Communist world to destroy the German power
over Europe.

Was this the real cause of World War II?

Did the International Bankers have to destroy the
Government of Germany because it issued debt and interest free money just like Lincoln did?

https://wiki.p2pfoundation.net/Colonial_Script

https://www.ukcolumn.org/article/case-greenback-pound

https://theamericanchronicle.blogspot.com/2013/09/the-real-cause-for-american-revolution.html

https://mordant-truth.weebly.com/hilter-monetary-system-real-cause-of-ww2.html

Austin wrote:The 20-year transformation plan making Russia a global rail leader

http://www.infrastructure-intelligence.com/article/nov-2018/20-year-transformation-plan-making-russia-global-rail-leader

For Wall Street, Russia Has Become ‘Bulletproof’

Sorry, haters, Putin’s securities market is better than Xi’s, better than Trump’s. It’s Europe’s fault.

For all the talk about starving Vladimir Putin and, inevitably, Russia of financial resources with sanctions on major state-run companies, Russian bonds have become a must-have. Not only in Europe where yields are nearly zero, but also among American global bond fund managers that want to get paid for holding debt.

Considering there is about $15 trillion worth of negative-yielding bonds out there, Russia’s 10-year sovereign looks great to everyone, except to the most scornful of the anti-Russia crowd, at around 6.4% in rubles.

Russia’s 2027 dollar-bond pays 4.25% interest. Germany doesn’t pay at all, and instead yields -0.35%. The U.S. 10-year Treasury bond yields just 1.8%. Those countries also have debt burdens that can spook long-term investors. Russia has practically no debt at all.

“They’ve made themselves bulletproof,” says James Barrineau, co-head of emerging-market debt for Schroders Investment in New York. “They can pay off all their foreign debts with their central bank reserves. Plus, they’re cutting interest rates. The currency is very stable. And they have room on the fiscal side to spend on their economy.”

Russia has over $433 million in foreign currency reserves and $107.9 million worth of gold. It is the largest reserves among the big emerging markets after China, which has more than $3 trillion.

Ridiculously low interest rates on European government bonds, and higher dividends being paid by Russian companies, have investors overweighting Russian securities.

Here are some of Russia’s most well-known dividend paying stocks:

Retailer Magnit’s dividend yield is a whopping 8.62%. Its competitor X5 Retail Group pays 4.15%.

Lukoil, a privately owned oil company that even has gasoline stations in New York, pays 5.05%. Their stock price is up 39% this year.

Telecommunications giant, Mobile TeleSystems (MBT), which trades on the NYSE, pays 5.7%. MBT is up 26.4% year-to-date.

The VanEck Russia (RSX) pays 3.91% in dividend yield as of November 15.

Russia’s break from the Soviet Union came with at least three financial crises, each one either delivering a—temporary—crushing blow. Since the breakup of the USSR, many of Russia’s wealthy have left or hid money offshore while the country still faces something of a brain drain. Russians in the science and engineering fields are working in the U.S. and Western Europe instead. All of this, coupled with lackluster demographics, stagnant oil and gas prices and U.S. sanctions, have been a big negative for Russia.

Russia is used to negatives.

The 1995 banking crisis that led to the 1998 financial meltdown saw the domestic investor give up on the idea of investing in stocks and bonds. Capitalism was a failure to them.

A few years later, they turned to real estate, building a Chinese-style housing bubble that popped in 2008 and never recovered.

Eleven years on and Russian real estate prices are almost 60% lower than they were at their market peak in dollar terms. Plus the currency is much weaker ever since central bank governor Elvira Nabiullina took the ruble out of its strict trading band against the dollar. It used to trade in the 30s. Now it’s in the 60s.

Since real estate is no longer offering Russians the returns on investment it once did, those who don’t have enough capital to open up accounts overseas, or need to keep money at home, are rediscovering the stock market.

This slow but sustained development of trust was partly the result of time and partly the result of a number of more fundamental changes taking place within Russian securities law.

Since 2007, the number of retail clients registered with the Moscow Exchange has gone up 120%.

Legislation protecting investors was improved. A deposit insurance system was created. Savings banks institutionalized and professionalized, thanks in large part to foreign competition from Europe, and the Russian banks were subject to tighter rules, exactly like those of Western banks. Those that were not up to speed, either failed or were taken over by the Russian Central Bank. Russia’s banking system may look smaller than it did a few years ago, but it’s getting cleaned up.

Since 2016, retail investors are facing a problem of gradually falling savings deposit rates. In real terms, savings deposits now return less than 2% per year.

So while Russian bonds have been made “bulletproof” thanks to negative yield in Europe and Russia’s low levels of foreign debt, giving bond investments their repayment confidence, Russia’s stock market is beefing up because the locals are running out of places to put their money.

Just as with real estate, the shift to a new investment is coming. Equities are it. Good returns over the last 12 months will entice more investors to jump in, driving up Russian stock prices.

Russian GDP is expected to grow by just under 2% next year.

“A major change in the Russian financial sector over the last couple of years has been the simultaneous rise in the dividend yield of Russian stocks and the fall in the yields offered by government and corporate debt, and retail deposits,” say Roland Nash and Denis Rodionov, analysts for Moscow and London-based investment manager Spring Capital, writing in a report to clients this month. “The impact of this change will likely be greater interest from domestic investors in holding equities.”

https://www.forbes.com/sites/kenrapoza/2019/11/18/for-wall-street-russia-has-become-bullet-proof/

$433 million in foreign currency reserves and $107.9 million worth of gold