idbits, March 1998.
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Information herein is compiled and edited from a variety of sources
including The Bank of Finland, JRL List, Russian and European
and American newspapers.
The Russian State Budget projects revenues of$365.5 billion NEW rubles (59.3 billion) and spending of 499.9 billion (80.6 billion) with gross domestic product of 2.84 trillion rubles ($458 billion) and inflation of 5.7%. Revenues are overstated and inflation is understated.
U.S. department of Agriculture is providing $40 million in credits to Ukraine to finance imports of U.S. Farm products. The credit and currency council under the cabinet will offer guarantees. The loan will be for 18 months at 6.255 The last date for registraiton of contacts is September 30, 1998. The program may be extended for three years.
A huge USD 2 billion deal was struck by Russia's gas giant Gazprom and the Italian energy major ENI; it covers realization of oil and gas projects in Russia and other countries. The deal is similar in nature to one made between Gazprom and Royal Dutch Shell last November. ENI's press release mentioned the possibility that the company could purchase Gazprom shares.
Gazprom also signed an over USD 500 million deal with the Italian chemicals producer Technimont to build a polymer plastics plant in Tobolsk in western Siberia. The plant would take three years to build; when completed it would be the largest of its kind in Russia. Foreign firms would hold a 30% stake in the project. Financiers include the EBRD.
The Russian carmaker GAZ and its long-time partner Fiat signed a USD 850 million contract to produce 150,000 Fiats annually in Russia.
Russian securities commission to investigate four oil companies. Russia's Federal Commission for the Securities Market will launch investigations of four Russian oil companies (Sidanko, Yukos, Yuganskneftegaz and Samaraneftegaz) for possible violations of minority shareholder interests as well as the public interest.
In Sidanko's case, minority shareholders were apparently denied the opportunity to participate in a convertible bond issue last December, and as a result may have had their shares diluted. Sidanko's main owner, Uneximbank CEO Vladimir Potanin insists that his company's actions are completely legal under Russian law.
Yields on GKO treasuries fell from over 40% last week to about 34%. This is still high considering that last October prior to the Asian crisis they were below 20%.
Russia's original forecasts of GDP growth in 1998 have been lowered from 2.0% to 1.2% as a result of recent turmoil in global financial markets.
200-300 Russian banks are "unstable." Fortunately, they only represent about 4% of the assets held by the entire Russian banking system. The assets are concentrated in Russia's 200 largest banks, who in aggregate control 88% of assets. In total Russia has well over 1,600 banks at present.
The Bank of Estonia reported that its currency reserves shrank 9% in January.
Foreign car manufacturers will will not have to pay import duty if they invest USD 250 million over a period of five years.
Feb 11th AvtoGAZ, Nizhnegorod Motors, Fiat and the EBRD agreed on the establishment of a joint venture partner company. The estimated USD 850 million deal is the largest private foreign investment in Russia's car industry.
Sidanko's convertible bond issue annulled.
The securities commission has also been looking into allegations by minority shareholders that the Yukos oil company has been siphoning off production units' profits by purchasing oil from them at below-market prices (effectively transferring assets to the holding company). The case is being watched with great interest by investors, as the securities commission's decision is likely to set an important precedent in shareholder treatment.
Estonia's trade deficit last year came to EEK 20.9 billion (USD 1.5 billion). Exports amounted to EEK 40.4 billion and imports EEK 61.5 billion. Latvia's trade deficit was LVL 611million (USD 1.1 billion) last year. Lithuania had a trade deficit of LTL 6.1 billion (USD 1.5 billion).
Who is in the Top Ten Russian companies in Capitalization, Sales, Profits and Growth. (23 companies make up the group) Largest Capitalization "C" Largest Sales "S" Largest Profits "P" Largest Growth Rate "G"
Lukoil Oil Company C1 S3 P5 The exceptional position of Lukoil and United Energy System of Russia and Gazprom are an open secret, as is the dominance of enterprises in the raw materials system. These 23 enterprises account for 83.5% of the R735 trilion worth of sales made by the 200 leading Russian businesses, whereas machine building enterprises account for only 7.4%. In the United States UES would place 15th and Gazprom 25th. But as far as capitalization is concerned the two companies would rank 100th and 300th in the USA. The pulp and paper industry is the fastest developing industry in Russia. The Arkhangelsk Pulp and paper mill is the leading growth company in Russia. Of the 20 fastest developing companies eight are in the pulp-and-paper industry. This rapid growth is largely due to the sharp increase in demand in the world paper market. Contrary to the widespread view, it is high technology rather then raw materials that is the most promising sector for investments in Russia, and telecommunications companies are considered the most attractive to investors although they are in reality not going to be the best performing. A comparison with U.S. companies indicates that business risks are three times those in the U.S. and productivty is one tenth of the U.S. U.S. average sales per worker are $435,000 while in Russia they are $31,300. Ten percent of Russia's companies account for 75% of all sales. The degree of industrial concentration in Russia is 6 times that of the United States.
 <- To Tidbits November 1997 to February 1998 To Tidbits April 1998 -> 
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