The weak ruble is a signal to buy shares…or more caviar
With the Russian ruble devalued by 11 percent, experts say there are opportunities for foreign investors to earn money on the stock market or, for those who would rather stay away from the stock market, can spend their money wisely in other areas. However, the experts advise everyone to hurry, as by next year, the ruble may strengthen.
What to buy
If a foreign traveler wants to bring something from Russia, he can do so cheaper now than if he waits the middle of next year.
Certainly, the most important Russian delicacy is caviar. Prices in Russia for this product are set in rubles, about 4,000 rubles for 100 grams ($120). Prices for this product, of course, vary periodically, but analysts are advising to buy it right now.
Fish market experts are telling lovers of Russian red caviar to wait with their purchase until the following spring. Then active fishing will begin and a sharp decline in the prices for this product is expected in Russia. This fact, together with a weak ruble, may eventually lead to good prices for this commodity.
However, it is necessary to take into account that, because sturgeons are under state protection, there are limits placed on exports of caviar from Russia. Each person may take out of the country no more than 250 grams.
There are no such restrictions for red caviar. However, one should also take into account the health standards in the country into which goods are being imported. In addition, the amount of product should not cause suspicion when going through customs.
For example, if the passenger is carrying 4 kilograms of caviar, a customs officer may decide that there is intent to resell the product, and there may be problems.
According to Anna Kokoreva, an analyst at the Alpari Company, the most attractive investments today are in infrastructure projects. For example, there is the construction of high-speed railways (Moscow-Kazan) and facilities for the FIFA World Cup in 2018.
In addition, the expert points out that today Russia is actively building and developing industrial parks, which will be happy to receive new residents. “This will be an additional huge market for representatives of the Russian innovation businesses,” she said.
In addition, according to Kokoreva, investments into shares of oil companies look traditionally attractive. After the adoption of the law on the LNG (liquefied natural gas) liberalization, the attractiveness of Rosneft and Novatek corporate stocks, being alternative suppliers (to Gazprom) of gas from Russia, have increased.
“Many kinds of securities of first and second echelons remain promising for strategic investors. They are now traded at a discount of 30 percent to 40 percent due to serious country risks,” said Vasiliy Yakimkin, an analyst at the FIBO Group.
According to him, under such conditions, long-term investments into almost any instrument will be profitable, as the situation in the country will gradually improve, the risks will be reduced, and this will inevitably lead to an increase in the value of assets.
He is confident that, by factoring in current risks, it is possible to safely buy shares of major oil companies for the long term. To form a “defensive” portfolio, one should buy regional telecoms. If we talk about direct investments, the expert advises people to remember the main difficulties and risks in Russia, especially about the need to have access to administrative resources, when it comes to investing large sums of money.
Vincenzo Trani, chairman of the board of directors of Concern General Invest, noted that he would not invest into currency, trying to play on the ruble rate, but would invest into securities related to oil, infrastructure, and the banking sector.
“The portfolio may have 60 percent bonds, 30 percent stocks and 10 percent alternative investments,” the expert suggests. He recalled that now the Russian government is investing great amounts to support small businesses, and he advises people to pay attention to Russian and foreign funds specializing in investing funds into the real economy sector, into small business development.
However, those who still expect to make their play on the weak ruble, experts advise to hurry. Some of them believe that this weakening is a temporary event. Given the oil prices today supporting the current balance of payments of Russia, it is difficult to predict the rapid weakening of the ruble.
For example, Mr. Yakimkin is sure that that the ruble will begin to win back the positions it lost at the end of summer, and this, rather rapidly. Anna Kokoreva said she believes that in 2014 the U.S. dollar will be worth 31.5 rubles, and advises people, for now, to avoid investments into metallurgy and electricity. “So far, these two sectors of the Russian economy are the weakest, and their prospects are vague,” she said.