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www.bcs.ru/eng BrokerCreditService (BCS) financial
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Financial barometer Post-crisis
Investors are losing their
Deal on wheels: now
steps include
appetite for risk
Opel knows its route
cutting defi cit
OLEG MIKHASENKO CONTINUED FROM PAGE 1
PRESIDENT, BCS FINANCIAL GROUP
The time has come to replace
emergency anti-crisis meas-
ures with normal market
mechanisms, Nabiullina said.
It is all the more important for
Russia to give priority to cut-
Russia’s stock market has fallen sharply – decreasing ting the budget deficit and
hit the buffers. With plenty of by 50-65pc for bonds and curbing inflation – the two
available funds, the bench- Eurobonds – making lending major factors impeding the
mark RTS index is stuck at a more lucrative business. emergence of the “long money”
around 1,100-1,200 points. In other words, the situation needed for economic moderni-
The reason is straightforward: seems to have stabilised and sation.
investors, unwilling to take there are funds available for What is challenging is that
risks, are trying to discern the investment. If investors decide modernisation is needed ur-
long-term trend. corporate lending is a good gently, while it will take years
Strategic investors have business, given the risk/re- to rein in infl ation. So the gov-
adopted a wait-and-see atti- turn ratio, rates will be going ernment plans to return to “de-
tude, not hurrying to choose a down. velopment institutions” (state
long-term strategy. A number For this to happen, companies institutions and corporations
of factors suggest that the must show they have learnt in strategic areas), at the same
global economy, and Russia to deal with the crisis, find- time encouraging private busi-
in particular, has withstood ing customers despite falling ness to participate.
the storm and is beginning to demand. MEDIA.GM.COM The economy ministry is focus-
recover. The situation in the banking German and American technologies will help to modernise Russian automobile industry ing on several sectors and pre-
While investors have taken sector is further complicated paring specific proposals.
this into account, more spe- by the fact that bad debts are Housing construction will be
cific signs are required – for undermining capital adequacy
CONTINUED FROM PAGE 1
ture. IzhAvto, which assembles ish Business Bureau, most jobs boosted by stimulating de-
example, steady GDP growth, ratios. To raise their capital South Korean Kia cars, was will be preserved. On the whole, mand through tailored mort-
stabilising employment, and adequacy to mandatory lev- State-owned Sberbank repre- about to be bought by Avtovaz the consortium plans to invest gage subsidy programmes.
increasing production – to els, banks will either have to sents the interests of the Rus- to launch joint production with 600m euros in Opel, not to speak Preliminary calculations only
support the rally. write off such debts or add sian automobile industry. Its Renault, but the crisis also of the 4.5bn euros in support cover inexpensive housing
There is enough cash to fuel more capital. All this could CEO, German Gref, comment- scuppered this deal. that will come from the Ger- priced at no more than 30,000
growth, especially in the West, create new problems in the ed on the purchase: “The whole Any of these plants would be man government. roubles per square metre. Na-
where more loans were is- banking sector. point of our participation in the happy to host Opel, and Sber- The main job cuts (according to biullina said the price was nor-
sued, and discount rates are Problems will probably not deal is technology import. If bank will soon announce the reports leaked to the press be- mal and economically justifi ed,
lower. There is no shortage reach the scale of the 1998 that does not materialise, it will lucky winner. As the largest fore reorganisation plans were hoping that developers would
of attractive investment op- default. That could only hap- be a waste of time.” bank in Russia, Sberbank is the unveiled) will affect plants in find it acceptable. The pro-
portunities, but the risk is still pen if oil prices dropped The Russian car industry needs major provider to the industry: Germany. All in all, about gramme will take effect in 2010
high. In Russia, economic to $20 a barrel. But with oil these technologies badly. In every major car manufacturer 11,000 jobs, almost a quarter of or even earlier, she promised.
growth is also hampered prices hovering at $70 a bar- spite of strong government sup- depends on Sberbank for fi- the total number, are to be cut There is potential for growth
by fears of banking sector rel and the West showing port Russian car manufactur- nancing. Should a manufactur- in Europe. Opel’s four plants in within consumer goods, with
problems. Heightened risk signs of economic recovery, ers have received over the last er go bankrupt, it would not Germany are to shed 4,500 out up to 50pc of demand current-
is due to the fact that banks such pessimistic scenarios few years, from a technological only have dire social conse- of a total 25,000 jobs, writes the ly met by imports, according to
have not yet fully recovered are unlikely. perspective the industry still quences; it would spell trouble Russian business newspaper the economy minister. Support
from the crisis. Hit by shrink- Among the most interesting lags far behind leading interna- for Sberbank as well. Vedomosti, citing the German will also be provided to the na-
ing demand, many corporate aspects of the crisis is the tional players. The technology While victorious, the consorti- Frankfurter Allgemeine Zei- tional automobile industry.
borrowers have been unable change in consumer demand gap has, of course, affected per- tung. Most of the cuts will be Innovative business projects
to repay their loans and have for financial products. Last formance, especially since for- made at the plant in Bochum are also high on the agenda,
had to sell collateral to settle year there were many inves- eign manufacturers have been ‘The Russian car in- (its workforce will be reduced though it is uncertain what
their debts. The level of non- tors willing to take risks. They allowed to build production fa-
dustry needs these
by half by 2011). Opel’s main specific measures will taken.
performing loans is quite high were investing in equities, cilities in Russia (a cluster com-
technologies badly.
enterprise in Russelsheim will Tax incentives for selected sec-
and this autumn we should including in Western compa- prising several plants is form- tors is not the best way to sup-
see which banks can cope nies, and also in mutual funds. ing near St Petersburg). As a re-
In spite of strong gov-
lay off between 1,400 and 1,800
workers out of a total 15,000, port business, Nabiullina said.
with the burden of bad debts Few investors opted for lower sult, Russian consumers have ernment support over while the plant in Kaiserslau- Today, most national govern-
and which will collapse. risk fixed-income securities: increasingly preferred cheap
the years, the industry
tern will trim 300 workers. The ments favour neutral taxation
As the crisis unfolded, loan some players not only invest- but reliable foreign-made cars
still lags far behind
only Opel enterprise to remain systems. Yet, given Russia’s
rates rocketed to 20-25pc ed all their savings, but even to domestic models designed particular challenges, the gov-
or more. Despite such high borrowed to invest in equities. (with rare exceptions) in Soviet
the leading interna-
untouched is the assembly plant
in Eisenach, where production ernment should perhaps con-
rates, in the first half of the Now, in a U-turn, the number times. tional players’ capacity from Saragosa, Spain, sider tax stimulus measures,
year banks and financial com- of risk-loving investors has Recently, Avtovaz, Russia’s fl ag- is to be moved. provided that tax administra-
panies found it much more decreased. ship car maker and leader in the One has to bear in mind, how- tion levels are raised and “black
beneficial to invest in fixed- Today demand is rising for low-end price band, has lost um will, nonetheless, face a host ever, that the fi nal job-loss fi g- holes” in the tax system elimi-
income instruments than lend savings products, includ- much ground to foreign compa- of problems. Magna’s automo- ures will be published after this nated, Nabiullina stressed. En-
to companies. In some cases, ing gold, hard currency and nies that assemble cars in Rus- tive partners, including Germa- report is issued. Russia Now ergy efficient companies ap-
annual yields on bonds and structured products. Clients sia. Chinese and Korean manu- ny’s Volkswagen, question its will follow developments with pear fi rst in line for tax incen-
Eurobonds reached 30pc in are seeking protection against facturers are now producing ability to prevent a confl ict of caution and scepticism. Indeed, tives.
foreign currency. Even bank inflation and devaluation. models that occupy the same interest between Opel and its the US company had already As for plans to reduce the
bond yields rose to 60pc. At Strange as it may seem, the market niche. The emerging other clients. And Opel’s plants promised Opel to the same bid- budget deficit, this won’t be
one point, Russian Standard’s number of clients increased partnership with shareholder outside Germany, including the der in the summer, but the achieved through indiscrimi-
bonds offered a yield of 100pc during the recession, with in- Renault-Nissan, which was to Vauxhall factory in Britain, transaction failed to close and nate spending cuts, the minis-
per annum. terest in investment and sav- modernise the Avtovaz produc- now fear massive job cuts. the competition continued. ter pledged. Emphasis will be
In such a situation, it made ings products growing. tion facilities, has been cut short Although these fears are natu- Nothing prevents GM from made on boosting the efficien-
more sense to invest in People are beginning to ap- by the crisis. ral, and not altogether ground- withdrawing from the deal cy of government spending,
fixed-income securities. The preciate the opportunities The attempt by Gaz, Russia’s less, it is too early to worry just again, especially given that along with qualitative changes
paradox was that by lending offered by equities, and the second largest car manufactur- yet: the winning consortium Magna’s principal lobbyist, Ger- in education and healthcare.
to companies, banks earned average investment of private er, to launch the Volga Siber has outlined its proposal with a man chancellor Angela Merkel, Yet secondary targets will have
less while assuming more individuals putting their money (based on a Chrysler model), broad brush. For example, there will lose much of her zeal in No- to be suspended, with particu-
risk. into mutual funds is around ended in fiasco: the company are no plans to shut Vauxhall in vember when the parliamentary lar attention paid to the selec-
Now bond returns have 350,000 roubles ($11,500). now faces a very uncertain fu- Britain; according to the Brit- election is over.
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tion of priority areas.
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