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Posts Tagged ‘Ukraine’

Is the ruble a basket case or oversold?

December 3, 2014 Comments off

by Chris Weafer, Macro-Advisory Ltd

At mid-session on the first trading day of December, the ruble had declined by 60% against the US dollar since the start of the year (over 70% since the start of 2013), and was down 45% against the euro (55% since January 2013). The obvious questions are: why has the ruble fallen so quickly and by so much? Does this collapse jeopardize Russia’s financial stability and raise the risk of a default? And, how much further can the ruble fall or is this another of those attractive buying opportunities that seem to be available in Russia every seven years?

Is the fall justified?

By most standard measures the ruble’s collapse has been extraordinary. That scale of decline is usually associated with an economy with huge debt obligations, a non-fundable budget and a current account deficit. Russia ticks none of those boxes. Total foreign sovereign debt is only at 3% of GDP, and total private sector foreign debt is at 33% of GDP and falling as a result of the fact that Russian companies are not able to refinance maturing debt on foreign markets. Despite spending approximately $70 bln in a futile defence of the ruble this year, the Central Bank of Russia (CBR) still has $420 bln in foreign exchange reserves, a total which includes $180 bln split between two readily available sovereign wealth funds. At the end of the third quarter the trade surplus was over $150 bln, up over 10% from the previous year, the current account surplus was just short of $60 bln, i.e. double that of 2013, and the federal budget surplus was equal to 2.1% of GDP. Read more…

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Pragmatism and Oil Should Cut Russia’s Risk Premium

June 24, 2014 Comments off

by Chris Weafer, Macro-Advisory Ltd

“The second half of this report is a review of the trends and risks in the oil industry. We have upgraded our second half oil price assumption to US$115 p/bbl and see a greater threat of a spike to US$120 p/bbl than a retreat to US$105 p/bbl for Urals crude”.

Despite the continuing violence, serious sanctions risk has eased.
Despite the continuing violence in eastern Ukraine, the addition of several individuals to the US sanctions list on Friday and the threat of so-called scalpel sanctions later this week, we believe that the available evidence shows the emergence of political pragmatism in Kiev and Moscow. President Vladimir Putin needs to avoid a move into more serious trade and economy disrupting sanctions and President Petro Poroshenko has a long list of difficult tasks ahead. Despite the Kremlin’s public response, the peace-plan tabled by President Poroshenko covers most of the concerns voiced by the Kremlin. Ukraine will sign a trade deal with the EU on 27 June.

Overly optimistic to expect an end to fighting anytime soon.
A scenario where there is a long-lasting low level, or sporadic, fighting in eastern Ukraine is entirely possible and that will keep investors nervous and the self-sanctions we have seen over the past three months in place for the rest of this year. Read more…

CRH Acquires Ukraine Business

April 26, 2013 Comments off

CRH plc announced that it reached agreement to acquire Lafarge-owned Mykolaiv Cement. With the addition of Mykolaiv Cement, located in the Lviv region of Western Ukraine, CRH becomes the market leader in Ukraine, allowing it to further leverage the benefits of the new Podilsky factory.

CRH in Ukraine: CRH entered the Ukraine market in 1999 with the acquisition of Podilsky Cement and in 2011 commissioned a state of the art dry process kiln at that facility with an annual clinker capacity of 2.3 million tonnes. Also in 2011, CRH acquired a majority stake in Odessa Cement.

Source: CRH plc.

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