Page 9 - RusRPTAug19

However, the Finance Ministry – as has clarified on a number of occasions – sees the maximum limit for NWF applying only to liquid assets of the fund, i.e., the sum of available cash in NWF’s deposits. Under this classification, the gross volume of NWF should reach c12% of GDP or c$160-170bn before the government should announce a change to its savings policy. We estimate the combined volume of NWF and funds saved by MinFin and intended for this fund, but yet to be formally transferred, currently stands at c$150bn. That means that it would take another 1-3 months before the NWF hits its maximum level. That would mean, from a legal perspective, the government would no longer be able to convert its surplus into FX to bolster savings, but instead would have to start spending. Hence, Nabiullina fears that a possible increase in public spending and a drop in demand for FX could weaken the level of financial stability in Russia through triggering an increase in inflationary expectations, pushing the ruble toward excessive appreciation.
The latest remarks from Anton Siluanov – First Deputy Prime Minister and Finance Minister – suggest the government does not intend any revision of the NWF rules, including a change to its maximum limit. However, Siluanov also noted that the government would continue to scrutinize and control future spending, which means that on a temporary basis its current saving policy could continue even when NWF is technically full. For how long this could happen is unclear and will largely depend on finalization of plans for new public spending – including the Kremlin-initiated national projects.
2.5 Sberbank and Yandex JV to end in divorce after only one year
It was supposed to be Russia’s e-commerce powerhouse, but only a year after they tied the knot the joint venture between Russia’s state-owned retail banking behemoth Sberbank and the leading tech company, not just in Russia, but all Europe, Yandex looks like it is going to break up in divorce.
“Sberbank and Yandex may exit e-commerce JV. The parties may be considering exiting the JV, while Sberbank may be eyeing another player in the area – Ozon or Avito – according to the Bell. The paper’s sources claim that both Sberbank and Yandex are unhappy with the partnership, and suggested a divorce. No decision has yet been made,” Maria Sukhanova, an analyst with BCS Global Markets reported in a note.
The JV, named Yandex.Market, was formed in April 2018 and was designed as an extensive e-commerce platform, which could host much of Russia’s enormous retail business.
E-commerce already accounted for 4.8% of Russia’s retail trade in 2018 but is now growing exponentially and is forecast to top 8.5% by 2024. Yandex.Market should have been a big part of that.
Yandex contributed its price comparison service, Yandex.Market, and Sberbank contributed RUB30bn ($471mn) to the joint venture. As half the country has an account at Sberbank, which is remaking itself as a fintech company, the possibilities were endless.
The two parties received equal shares in the JV of 45% each, and another 10% was held in reserve for stock options to raise more capital further down the road.
Parts of the joint venture are already working. Much of the new platform was to built on Yandex.Market, which is already working. In addition the first online shop, Beru.ru (I take) was launched in May 2018 and used to launch Yandex’s attempt to break into the smart phone business, that eventually flopped.
The partners have also launched the cross-border marketplace Bringly to compete with Chinese competitor Aliexpress that is responsible for nearly two
9 RUSSIA Country Report August 2019 www.intellinews.com