Are Russian Stocks a Buy?

Pssst…wanna buy some cheap stocks? How about some shares in Russkie enterprises? They’re the cheapest in the world…on a P/E of only 6.8 compared to a world average of about 12.

Bloomberg has more details:

While the Micex advanced 13 percent in the past year, its valuation tumbled 31 percent because Russian shares failed to keep pace with a surge in earnings estimates spurred by oil’s rally above $80 a barrel. Equity mutual funds in the world’s largest energy exporter attracted less money in the past six months than funds in the other so-called BRICs – Brazil, India and China – as investors favored more expensive shares in faster-growing economies, EPFR Global data show.

“Russia remains relatively out of favor in an emerging markets context,”said Lewis Kaufman, a money manager at Thornburg Investment Management, which oversees about $65 billion in Santa Fe, New Mexico. “If we can sustain oil prices of $80 to $100, Russian equities offer a unique combination of cyclical and structural recovery potential.”

Gazprom, Russia’s largest listed company, trades at 4.3 times 2011 profit estimates, compared with 10 times for PetroChina Co., the biggest Chinese energy company, according to data compiled by Bloomberg. The discount on the Moscow-based natural-gas monopoly to Beijing-based PetroChina has widened to 58 percent from 50 percent at the start of 2010, the data show.

Gazprom shares are poised to rally 34 percent in the next 12 months, according to the average of 10 analysts’ share-price estimates compiled by Bloomberg. The stock has retreated 7.8 percent this year, compared with a 2.3 percent gain for PetroChina.

Russia has the cheapest stocks among major developing nations, based on 10-year reported earnings, a valuation measure designed to adjust for economic cycles, Jonathan Garner, the chief Asia and emerging markets strategist at Morgan Stanley in Hong Kong, wrote in a Nov. 8 report.

“It’s probably the cheapest market among global emerging nations,”said ING’s Bakkum, who recommends an “overweight”position in Russia. “A lot people are prepared to buy Russian assets.”

*** Those poor TSA agents. Just doing their jobs. Trying to protect the safety of travelers…by groping their private parts. And now everyone is getting on their case.

One woman charged that her blouse had been pulled down, exposing her breasts to the whole airport…and that TSA agents laughed about it. One said he had missed the action. But no problem. He’ll watch the video, he said.

Another traveler said that an agent had put his hand down his pants.

All right, so they occasionally go too far…embarrass and humiliate travelers. But think of all the good they do!

Well…wait…we’re thinking. When did TSA ever actually stop a bomber? Never, as far as we know.

Did it ever discourage a bomber…so he had to take his rig and blow up a bus or a train or maybe even a golf cart instead? Not that we’ve ever heard about.

We’ve never been mistreated by an agent of the TSA. Bullied, yes. Threatened, yes. They’ve been impolite on occasion. We’ve been patted down so vigorously we didn’t know whether to leave a tip or lodge a complaint.

But we try to maintain a sense of humor.

“The trouble with you, is you just don’t get it,”said a paranoid friend lately. “Can’t you see? This TSA has nothing to do with keeping out bad guys. It’s about keeping us in. They’re not really there to make the airlines safer. Instead, it is just a preparation. They are getting Americans accustomed to following orders, standing in line, and acting like half-wits. They are also training up a whole class of goons. These guys don’t ask whether it really makes sense to pat down girl scouts and look at old ladies naked. They just do whatever they’re told to do. And they probably enjoy it.

“There are always some people like that – ready to be concentration camp guards and exterminators. The TSA program helps the authorities identify these people.”

“Why” we asked.

“Who knows…maybe they just want power. Maybe they just want a docile population so they can do what they want.”
Bill Bonner,
for Markets and Money

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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9 Comments on "Are Russian Stocks a Buy?"

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Of course you are aware why people don’t buy Russian stocks. To characterise the country’s mentality in one word (two words in English), “they steal”. People don’t trust Russian companies and their directors, especially with close ties to the government.
Go on, buy Gazprom shares. Watch your money being used for greasing the wheels, wasted in countless and pointless conferences, syphoned off by inefficient management.
How can we know the companies are even making profits when the accounts are not transparent?
And if a company is doing well, it would be a good time to confiscate it … for not sharing the spoils.

Ned S

And you haven’t told the half of it I suspect NV? There’s a good reason the Rouble hasn’t appreciated against the USD despite the fact Russia is a resource based economy I suspect? Mega tough business environment for locals – And foreigners are stuffed! :D

Biker Pete

Don’t confuse your SVs with your NVs, Ned!~ Big difference, maybe? ;)

No more incorrect than my recent reversal of China’s population, though: 3.1 rather than 1.3. What’s a coupla billion people between friends?!~

Surprised none of my admirers picked _that_ SNAFU up… . :D

Ned S

NV ‘n SV – Picked that up mate. No edit function here though hey? And what’s a few billion Chinese one way or the other when there’s just SO darn many of them either which way the only people of importance like GWB and Obama reckon maybe? ;)

Ned S

I’m getting older and stupider – Turned the tele on for some background noise while I looked at some tax – It was talking some wog lingo? Then walked past said tele while some clown on same was knocking on a door. I almost NEVER have the tele on … But went to my front door regardless and said “Hello???” – Frock me out in an Austrian’s national dress and call me a blonde Ranga I reckon! Dummy spit! … :D

Biker Pete

I get caught out by the Motorbike Frog occasionally, but the Telephone Bird is the worst. Phone’s never ringing by the time I’ve sprinted up the hill, of course….


Comment by Biker Pete on 23 November 2010:

Surprised none of my admirers picked _that_ SNAFU up..

Jumping on typo’s is your domain Biker…

Just because it was not commented on does not mean it was not noticed ;)

Biker Pete

Shoes: “Jumping on typo’s (sic) is your domain Biker…”

Now where would you get that idea, Shoes? ;)

Jenna Rardin

Have you ever considered including videos for your blog articles to keep the visitors more interested? What i’m saying is I just read through the whole page and it was very great but because I’m much more of a visual learner, I found that way to be far more helpful. well, let me know what you feel.

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