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March 1, 2019 www.intellinews.com I Page 5
As of February 22 Rosneft’s market cap had made some small gains to $65.0bn but Sberbank has shot past it again and had a market cap of $70.5bn to put it clearly in the lead – the threat of new sanctions notwithstanding.
Sberbank has become a so-called “tourist stock” – if an investor has an appetite for Russian risk then the first stock they buy is Sberbank. In the past the same role was played by oil major Yukos during the boom years, until its owner Mikhail Khodorkovsky was arrested and then jailed in 2013. And Gazprom shares were also a proxy for Russia in the second half of the noughties, where at one point its CEO Alexy Miller boasted that the company was on track to become the most valu- able company in the world, predicting its market cap would top $300bn. Gazprom’s market cap this February was $53.8bn and hasn't really moved from there for several years.
While Sberbank’s stock has recovered most of the ground it lost during last September’s sanction scare, it is clearly still well down from its previous peak when the bank’s market cap topped $100bn in March 2018. The threat of more sanctions and the slow pace of economic growth has capped the whole market which has remained range bound around the RTS index 1,000-1,200 since the an- nexation of the Crimea in 2014. That is half the
RTS’ all time high of 2,487 set on May 19, 2008, just before the US-induced global financial crisis hit that September.
Rosneft’s share price has been falling too since the start of the year after oil prices dropped from an average of over $75 in the last quarter of 2018 to an average of $56 in January. On top of that a political crisis in Venezuela has hurt the company where Rosneft has several projects.
While the state-owned heavyweights remain exposed to sanctions, in addition to the market forces and oil prices, the same seems to be less true of the big independently owned companies at the top of Russia’s equity tree.
As the second chart shows more clearly, both privately owned oil company Lukoil and privately owned gas producer Novatek have seen their stock almost double in value in the last year from around $30bn to around $60bn. Indeed Lukoil’s market cap of $59bn as of February 22 is just shy of Rosneft’s $64bn despite the fact that Lukoil has half the oil reserves that the state-owned oil giant has.
Clearly, despite their size and huge valuations, all of Russia’s leading state-owned companies are badly undervalued at the moment as geopolitics weighs on their share prices.