Page 3 - bne_newspaper_May_24_2019

Top Stories
May 24, 2019 www.intellinews.com I Page 3
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,275
0%
19.2
MOEX
2,619
1%
10.5
MSCI EM
985
-10%
2.0%
S&P
2,822
-4%
14.0%
NASDAQ
7,628
-6%
16.0%
DAX
11,952
-2%
13.0%
FTSE
7,231
-4%
7.0%
Commodities
Price, $
1M YTD
Brent
68.0
-9%
26%
WTI
57.7
-13%
27%
Urals
74.2
-4%
65%
Gold
1,283
1%
0%
Silver
14.6
-2%
-6%
Nickel
11,865
-5%
12%
Copper
5,860
-9%
-2%
Aluminum
1,739
-6%
-7%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
72.52
1%
-9%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms
M&M RTS MOEX
15
22
20
17
19.2
5
10.5
0 5 10 15 20 25
14
Source: MOEX, BCS GM
source: MOEX, BCS GM
“ring-fence” – special rules that prevented foreign portfolio investors from buying the locally traded shares – was pulled down in 2006.
It hasn't worked out like that. US technology com- pany Apple became the world’s first trillion dol- lar company last August while the market cap of Gazprom has shrunk seven-fold to a mere $56bn now. Gazprom throws off a lot of cash, but the man- agement refuse to share its profits with investors, say fund managers interviewed by bne IntelliNews.
“It's like investing in a bond,” says Kirill Tachen- nikov, the oil and gas analyst with BCS Global Markets. “The company makes a lot of money, but every year it paid out that same RUB8 per share regardless of how well or badly the com- pany had performed. That was true until now.”
Gazprom management have argued it needs its cash to pay for a slew of mega-infrastructure pro- jects, but Russia’s Ministry of Finance has been on the hunt for fresh sources of revenue to foot President Vladimir Putin’s RUB27 trillion spend- ing bonanza that was announced last year during his state of the nation speech.
Gazprom is spending nearly all the money it makes on building infrastructure that in theory adds to the value of the company, but in prac- tice simply eats up its cash. Last year Gazprom launched a record capital expenditure (capex) programme, investing over RUB2.1 trillion ($32bn) in a series of pipelines.
“The money that Gazprom is making is literally being buried – in one large capex project after an- other: in the pipeline in the Baltic Sea, in Turkish Stream, in the connection with China, in a pipeline on the moon...” says one fund manager that would rather not be named. “The book value of all these assets is over $300bn, but Gazprom makes very little cash from these projects. And what profit there is always goes back into the ground.”
Gazprom’s revenue last year was a massive $131bn and income a tidy $23bn, but analysts
Sectors: % return YTD