Russian Strategy & Economics

8/14/2019 Russian Strategy & Economics

1/29


2/29

Source:Bloomberg,

31

Dec

2009 Source:

MSCI,

Bloomberg,

31

Dec

2009Source:

MSCI,

Bloomberg,

31

Dec

2009

MSCIRUperformancevsEM,GlobalOil(%):In2009

theoildependentRussianmarketoutperformedboth

theMSCIEMandAMEXOilindices.

Russianindicesperformance(%):In2009theRTSIndex

($)outperformedboththeRDX($)andtheMICEX(RUB).

MSCIIndices,1Mperformance:Overthelastmonth

MSCIRussia(up3%)hasunderperformedwithinthe

EMuniverse.

MSCIindices,Currentindexlevelvs5Yaverage:

Comparedtoits5Yaverage,theMSCIRUIndexis

currentlyatthelowestlevelofanyEM.

Russianmarketvolatility,90Days:Althoughsharply

downfromitsrecenthigh,theRussianmarket

remainsmorevolatilerelativetoEMpeers.

Source:MSCI,Bloomberg,31Dec2009 Source:MSCI,Bloomberg,31Dec2009 Source:MSCI,Bloomberg,31Dec2009

MSCIindices,2009performance:In2009MSCIRussia

gained100%andassuchwasthefourthbestperforming

emergingmarket.

STOCKMARKE

TPERFORMANC

E

3%3%

4%4%

5%6%

7%8%9%

20%

5%2%

1%0%

1%2%

10% 5% 0% 5% 10% 15% 20%

CzechRepPoland

HungaryChinaBrazil

MexicoRussia

India

MSCIEMArgentina

S.AfricaIndonesia

ThailandKorea

TaiwanTurkey

69%70%

74%74%75%

92%100%101%

121%121%

61%59%

53%53%

37%20%

0% 30% 60% 90% 120%

CzechRepPolandMexico

S.AfricaChina

ArgentinaKorea

ThailandHungary

MSCIEMTaiwanTurkeyRussia

IndiaIndonesia

Brazil

30%

0%

30%

60%

90%

120%

Jan09 Mar09 May09 Jul09 Oct09 Dec09

MSCIRussia MSCIEM AMEXOIL

30%

0%

30%

60%

90%

120%

Jan09 Mar09 May09 Jul09 Oct09 Dec09

RTS Micex RDX

7%4%2%

2%10%12%

16%19%

23%27%28%28%

45%46%

66%71%

20% 0% 20% 40% 60% 80%

RussiaPoland

HungaryArgentin

TaiwanCzechKoreaThailand

MexicoTurkey

S.AfricaEM

IndiaChina

IndonesiaBrazil

0

20

40

60

80

100

Jan07 Jul07 Dec07 Jun08 Dec08 Jun09 Dec09

RTS MSCIWorld MSCIEM

2


3/29

MSCIRussiaEnergyIndexrelativetoMSCIEM

Energy:In2009RussianEnergynamesperformedin

linewithEMpeers.

Source:MSCI,

Bloomberg,

31

Dec

2009 Source:

MSCI,

Bloomberg,

31

Dec

2009 Source:

MSCI,

Bloomberg,

31

Dec

2009

MSCIRussiaMaterialsIndexrelativetoMSCIEM

Materials:RussianMaterialsstocksoutperformed

theirEMpeersby19%in2009.

MSCIRussiaFinancialsIndexrelativetoMSCIEM

Financials:MSCIRussiaFinancialsoutperformed

theirEMpeersby88%.

MSCIRussiaCon.StaplesIndexrelativetoMSCIEM

Con.Staples:Russia'sbestperformingsectorin2009

relativetoitsMSCIEMpeers.

MSCIRussiaTelecomsIndexrelativetoMSCIEM

Telecoms:RussianTelecomsnamesoutperformed

theirEMpeersby52%.

Source:MSCI,Bloomberg,31Dec2009Source:MSIC,Bloomberg,31Dec2009Source:MSCI,Bloomberg,31Dec2009

MSCIRussiaHealthCareIndexrelativetoMSCI

EMHealthCare:MSCIRussiaHealthCare

outperformeditsEMpeersby38%.

STOCKMARKETPERFORMANC

E

0.8

0.9

1.0

1.1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Jan Feb Mar Apr May Jun Jul Aug Sep Nov Dec

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4


0.7

0.8

0.9

1

1.1

1.21.3

1.4

1.5

1.6

1.7


0.4

0.6

0.8

1.0

1.2

1.4

1.6


3


4/29

MSCIRussia:1Mperformancebysector(%) MSCIRussia:3Mperformancebysector(%) MSCIRussia:2009performancebysector(%)

Source:MSCI,Bloomberg,31Dec2009Source:MSCI,Bloomberg,31Dec2009 Source:MSCI,Bloomberg,31Dec2009

Source:MSCI,

Bloomberg,

31

Dec

2009 Source:

MSCI,

Bloomberg,

31

Dec

2009Source:

MSCI,

Bloomberg,

31

Dec

2009

MSCIRussia:Sectorcorrelationswithoilprice(rolling

correlationofweeklychanges)

MSCIRussia:CorrelationwithMSCIEMandMSCI

Worldindices(rollingcorrelationofweeklychanges)

MSCIRussia:Correlationwithoilprice(rolling

correlationofmonthlychanges)

79%

85%

93%

100%

115%

141%

232%

262%

0% 50% 100% 150% 200% 250% 300%

Energy

Telecoms

HealthCare

MSCIRussia

Utilities

Materials

Financials

ConsStaples


E

6%

1%

0%

3%

3%

5%

16%

20%

10% 0% 10% 20%

Utilities

Materials

Telecoms

Energy

MSCIRussia

HealthCare

Financials

ConsStaples

3%

5%

6%

10%

12%

14%

33%

37%

0% 10% 20% 30% 40%

Utilities

Telecoms

Energy

MSCIRussia

Materials

Healthcare

ConsStaples

Financials

0.0

0.2

0.4

0.6

0.8

1.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09

w.MSCIEM w.MSCIWorld

0.4

0.2

0.0

0.2

0.4

0.6

0.8

1.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09

0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Jun06 Dec06 Jul07 Jan08 Aug08 Feb09 Sep09

Energy FinancialsMaterials TelecomCons.stpls

4


5/29

RDXperformance,1M(%)

Source:

Bloomberg,

31

Dec

2009

RTSperformance,1M(%)

Source:Bloomberg,31Dec2009 Source:Bloomberg,31Dec2009

MICEXperformance,1M(%)


E

18%

10%5% 3% 3%

0% 0% 0%1% 1%

10% 12% 13%14% 16%

20% 21% 21% 23%

39%

30%

20%

10%

0%

10%

20%

30%

40%

50%

RTKM

RBCI

URKA

PMTL

OGKE

TATN3

LKOH

HYDR

PLZL

MTSI

SNGSP

VTBR

RASP

CHMF

MSNG

SBERP

AFLT

URSI

SBERP

VTEL

TOPBOTTOM

14%11%7% 6% 5% 4%

3% 2% 2% 1%

11%

18%25% 27%

50%

76%

41%

26%18%15%

30%

10%

10%

30%

50%

70%

FEES

URKA

RTKM

OPIN

SVAV

SNGS

MAGN

PHST

PMTL

NLMK

NMTP

TRNFP

SBER

AFLT

ESMO

URSI

BANE

NNSI

ENCO

SPTL

TOPBOTTOM

12%10%

5%3%

0% 0%

0%2% 2% 4%

6%8%

11%14% 15%

15%

10%

5%

0%

5%

10%

15%

20%

URKA

ATAD

NLMK

PLZL

NVTK

LKOD

SGGD

HYDR

ROSN

MNOD

VTBR

SSA

EVR

OGZD

SVST

TOPBOTTOM

5


6/29

RDXperformance,2009(%)

Source:

Bloomberg,

31

Dec

2009

RTSperformance,2009(%)MICEXperformance,2009(%)

Source:Bloomberg,31Dec2009 Source:Bloomberg,31Dec2009

STOCKMARKETPERFORMANCE

239%

663%

450%

389%338%

300%265%

251%

246%

205%

109%108%

108%99%

93%89%

76%70%

63%

43%80%

100%

280%

460%

640%

820%

RTKM

SNGS

GAZP

LKOH

HYDR

AFLT

MTSI

OGKE

VTBR

PLZL

NLMK

TRNFP

MSNG

NOTK

SBER03

OGKC

MAGN

RASP

VTEL

SBERP

TOPBOTTOM

2%

16%55% 61% 65% 67% 73% 76%

80%

265% 280%

347%

35%

444%

550%

369%278%

340% 362%371%

50%

100%

250%

400%

550%

OPIN

RTKM

SCON

IRGZ

SNGS

NMTP

GAZP

AFLT

LKOH

HYDR

TRNFP

OGKC

SBER

ENCO

MGNT

ESMO

RASP

AFKS

NNSI

BANE

TOPBOTTOM

80% 82% 82%123% 136% 136% 140%

141%

188% 209%

236% 250%269%

311%

0%

100%

200%

300%

400%

SGGD

OGZD

LKOD

VTBR

ROSN

MNOD

PLZL

URKA

ATAD

NLMK

EVR

NVTK

SVST

SSA

TOPBOTTOM

6


7/29

MICEXliquidity

($mn):

Liquidity

on

the

MICEX

has

recovered

from

its

recent

low

at

end

2008/beginningof2009,withanaveragedailytradedvolumeof$1.8bnoverthepast10

months.

RTSliquidity

($mn):

Liquidity

on

the

RTS

in

2H09

only

slightly

improved

on

1H09

and

remainswellbelowitsprecrisislevel.(Note:dataisforRTSClassicaIndex)

Source:

Bloomberg,

Aton

estimates,

31

Dec

2009

RDXliquidity($mn):WhiletheliquidityinGDRs,representedherebytheRDXIndex,

hasrecoveredsomewhatfromitsrecentlow,liquidityremainswellshortofitsprecrisis

level.

Source:Bloomberg,Atonestimates,31Dec2009 Source:Bloomberg,Atonestimates,31Dec2009

0

1,000

2,000

3,000

4,000

5,000

6,000

Jan08 Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09

Ave.value=$2,197

Ave.value=$856

Ave.value=$1,828

0

1,000

2,000

3,000

4,000

5,000

Jan08 Apr08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09

Ave.value= $586mn

Ave.value= $1,664

Ave.value= $854

0

20

40

60

80

100

120

Jan08 Apr08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09

Ave.value=$44

Ave.value=$11

Ave.value=$13

MARKET

LIQUIDITY

7


8/29

P/CF2010E:Inaddition,Russiahasoneofthelowest2010Eprice/cashflowratios

(5.8x)intheemergingmarketspace.

Source:

MSCI,

Bloomberg,

13

Jan

2010Source:

MSCI,

Bloomberg,

13

Jan

2010

12MFWD

P/E:

With

a12M

FWD

P/E

of

9.1x,

Russia

hasthelowestP/EratiointheEMuniverse.P/BV

2010E:

The

same

is

true

for

2010E

P/BV

ratios,

withMSCIRussia'saggregateratioat1.1x.

Dividendyield2010E:Withoneofthesmallestexpecteddividendyields(2.4%)Russia

remainsalimiteddividendplay.

Source:MSCI,Bloomberg,13Jan2010 Source:MSCI,Bloomberg, 13Jan2010 Source:MSCI,Bloomberg,13Jan2010

EV/EBITDA2010E:Russiaalsolooksattractiveon

EV/EBITDAratios,

with

amultiple

of

5.1x,

again

the

lowestintheEMuniverse.

MARKETV

ALUATIONS

9.110.310.510.510.5

11.211.611.8

11.913.1

14.414.814.915.0

17.518.4

0 5 10 15 20

RussiaTurkey

KoreaEM

ArgentinaCzech

ThailandHungary

S.AfricaBrazilChina

PolandIndonesia

MexicoTaiwan

India

1.11.3

1.41.51.6

1.71.7

1.92.0

2.12.1

2.32.6

2.63.2

3.4

0.0 1.0 2.0 3.0

RussiaHungary

KoreaPoland

S.AfricaTurkey

Thailand

EMTaiwan

CzechBrazilChina

MexicoArgenti

IndiaIndonesi

4.15.35.45.5

5.85.95.9

8.1

8.38.5

9.310.1

10.310.5

3.3

0 3 6 9 12

HungaryPoland

KoreaTurkey

S.AfricaRussia

ArgentinaThailand

Brazil

EMMexico

ChinaIndia

CzechTaiwan

5.15.2

6.46.56.76.7

7.37.67.68.18.5

9.310.0

26.5

0 5 10 15 20 25 30

RussiaCzech

Thailand

ChinaBrazil

Indonesi

MexicoTurkey

EMS.Africa

PolandHungary

IndiaArgenti

1.21.7

2.42.4

2.93.0

3.13.4

3.5

3.63.9

3.94.1

4.24.2

6.4

0 1 2 3 4 5 6 7

IndiaKoreaRussia

MexicoEM

ChinaBrazil

IndonesiHungary

TurkeyS.AfricaTaiwan

ThailandArgentiPoland

Czech

8


9/29

12MFWDP/E

(x)

P/BV2010E

(x)

P/BV2011E(x) EV/EBITDA

2010E(x)

EV/EBITDA

2011E(x)

P/CF2010E(x) EPSgrowth

2009E*

EPSgrowth

2010E*

Currentindex

levelvs5Yave.

Russia 9.1 1.1 1.0 5.1 4.2 5.8 45% 36% 7%

Argentina 10.5 2.6 2.4 26.5 23.7 5.9 66% 14% 2%

Czech 11.2 2.1 2.0 5.2 5.0 10.3 4% 2% 12%

Turkey 10.3 1.7 1.5 7.6 6.3 5.4 3% 10% 27%

S.Africa 11.9 1.6 1.2 8.1 6.6 5.5 21% 14% 28%

Brazil 13.1 2.1 1.9 6.7 5.8 8.1 6% 22% 71%

Poland 14.8 1.5 1.4 8.5 7.3 4.1 34% 14% 4%

Mexico 15.0 2.6 2.3 7.3 6.4 8.5 8% 17% 23%

EM 10.5 1.9 1.7 7.6 6.6 8.310% 27% 28%

Korea 10.5 1.4 1.3 N/A N/A 5.3 25% 33% 16%

China 14.4 2.3 2.0 6.5 5.6 9.3 1% 22% 46%

India 18.4 3.2 2.8 10.0 8.0 10.1 4% 2% 45%

Taiwan 17.5 2.0 1.9 N/A N/A 10.5 25% 71% 10%

Thailand 11.6 1.7 1.5 6.4 5.5 N/A 9% 13% 19%

Hungary 11.8 1.3 1.2 9.3 6.9 3.3 39% 15% 2%

Indonesia 14.9 3.4 2.9 6.7 5.8 1.7 2% 13% 66%

Lowestratios

Midrange

Highestratios

Source:MSCI,Bloomberg,13Jan2010,exceptCurrentindexlevelvs5Yave.whichis31Dec2009

Valuationandearningsmatrixforselectedemergingmarkets

*

Note

that

for

EPS

growth,

dark

red

shading

refers

to

the

highest

number

and

dark

grey

the

lowest

MARKETV

ALUATIONS

9


10/29

P/BV2009vs2010E:Themarketcurrentlyexpectsa

marginalexpanionofbookvaluein2010.

Source:MSCI,Bloomberg, 13Jan2010

Financialsstocks2010EP/BV:RussianFinancials

currentlylookexpensiveon2010EP/BVmultiples.

P/BV:Discount/premiumvsEMandWorld

12MFWDP/E;currentvssixmonthsago:Overthe

pastsix

months

Russia's

P/E

has

re

rated

across

the

board,withthemarketagreggateP/Erising71%.

12MFWDP/E:RelativetoMSCIEMandWorld

indices,Russia

is

looking

increasingly

attractive

on

12MFWDP/Eratios.

12MFWDP/Ediscount/premiumvsEMand

World:Russia

trades

at

a14%

discount

to

EM

(Energy28%,Materials6%,Telecoms14%).

Source:MSCI,Bloomberg,13Jan2010Source:MSCI,Bloomberg,13Jan2010

Source:

MSCI,

Bloomberg,

13

Jan

2010 Source:

MSCI,

Bloomberg,

13

Jan

2010 Source:

MSCI,

Bloomberg,

13

Jan

2010

MARKETV

ALUATIONS

0

5

10

15

20

MARKET

Aggr.

ENERGY

MATERIALS

CONS

STAPLES

TELECOMS

HEALTH

CARE

12MFWDP/E 12mFWDP/E6MAGO

9

7

10

11

10

15

18

15

13

18

15

12

14

14

23

14

1212

0 5 10 15 20 25

MARKETAggr.

ENERGY

MATERIALS

CONSSTAPLES

TELECOMS

HEALTHCARE

Russia EM World

25%

1%

14%

43%

66%

7%

28%

62%36%

41%43%

54%

85% 40% 5% 50%

TELECOMS

MATERIALS

FINANCIALS

ENERGY

MARKETAggr.

UTILITIES

RussiavsEM RussiavsWorld

14%

28%

14%

45%

21%

55%

14%

15%0%

27%

6%

38%

70% 40% 10% 20% 50%

MARKETAggr.

ENERGY

MATERIALS

CONSSTAPLES

TELECOMS

HEALTHCARE

RussiavsEM RussiavsWorld

2.1

1.9

1.2

0.0 0.5 1.0 1.5 2.0 2.5

Russia

EM

World

0

1

2

3

TELECOMS

MATERIALS

FINANCIALS

MARKET

Aggr.

ENERGY

UTILITIES

2010 2011

10


11/29

MSCIRussia,EV/EBITDA2010Evs2011E


MSCIRussiavsEMandWorldindices,EV/EBITDA2010E

MSCIRussiaP/CF,2010Evs2011E


MSCIRussiavsEMandWorldindices,P/CF2010E

MARKETV

ALUATIONS

4.1 4.45.1

6.9

8.8

2.83.7

4.2

5.8

8.0

0

2

4

6

8

10

UTILITIES ENERGY MARKETAggr. MATERIALS TELECOMS

2010 2011

4.4

5.1

8.8

5.6

7.6

5.0

7.3

7.6

6.9

4.1

7.8

6.7

11.9

5.4

5.1

0 2 4 6 8 10 12

UTILITIES

ENERGY

MARKETAggr.

MATERIALS

TELECOMS

Russia EM World

5.1 5.9

4.3

9.38.9

4.55.0

3.94.4

8.1

0

2

4

6

8

10

12

ENERGY MARKETAggr. TELECOMS UTILITIES MATERIALS

2010 2011

8.9

9.3

4.3

5.9

5.1

10.0

7.3

5.4

8.4

7.2

5.6

4.3

5.6

6.7

10.0

0 2 4 6 8 10 12

MATERIALS

UTILITIES

TELECOMS

MARKETAggr.

ENERGY

Russia EM World

11


12/29

Source:MSCI,Bloomberg,31Dec2009 Source:MSCI,Bloomberg,31Dec2009

Source:MSCI,Bloomberg,31Dec2009


MSCIRussia

Consumer

Staples

and

EM

Consumer

Staples12MFWDEPS(Jan2008=100)

MSCIRussia

Telecoms

and

EM

Telecoms

12M

FWD

EPS(Jan2008=100)

MSCIRussia

Financials

and

EM

Financials

12M

FWDEPS(Jan2008=100)


MSCIRussiaEnergyandEMEnergy12MFWDEPS

(Jan2008=100)


MSCIRussiaMaterialsandEMMaterials12M

FWDEPS

(Jan

2008=100)

MSCIRussiaandEM12MFWDEPS(Jan2008=100)

50

60

70

80

90100

110

120

130

140

150

Jan08 May08 Oct08 Mar09 Aug09

Russia EM

50

70

90

110

130

150

170


Russia EM

50

70

90

110

130

150

170


Russia EM

COMPANY

EARNINGS

40

50

60

70

80

90

100

110

120


Russia EM

50

60

70

80

90

100

110

120


Russia EM

0

20

40

60

80

100

120

140


Russia EM

12


13/29

Source:MSCI,Bloomberg,13Jan2010 Source:MSCI,Bloomberg,13Jan2010

Earningsgrowth,

2009

(%):

The

consensus

(IBES)

earnings

outlook

for

FY09

is

for

acontractionof45% oneofthemostnegativeoutlooksintheEMspace.

Earningsgrowth,

2010E

(%):

In

asharp

contrast,

the

consensus

(IBES)

expects

areboundinearingswith34%aggregategrowth

COMPANY

EARNINGS

66%

39%34%

25%21%

10%9%

6%4%3%1%

2%4%

8%25%

45%

80% 60% 40% 20% 0% 20%

ArgentinaRussia

HungaryPolandTaiwanS.Africa

EMThailand

BrazilIndia

TurkeyChina

IndonesiaCzech

MexicoKorea

2%2%

10%13%13%13%

14%14%

15%17%

21%23%

26%32%

34%

5% 0% 5% 10% 15% 20% 25% 30% 35% 40%

CzechIndia

TurkeyPoland

IndonesiaThailand

ArgentinaS.Africa

HungaryMexico

ChinaBrazil

EMKoreaRussia

Taiwan 71%

13


14/29

Oilprice(Brent$/barrel)

Aluminiumprice

and

inventories

Source:Bloomberg,31Dec2009Source:Bloomberg, 31Dec2009

Goldpriceandinventories Nickelpriceandinventories

Source:Bloomberg,31Dec2009Source:Bloomberg,31Dec2009 Source:Bloomberg,31Dec2009

Source:Bloomberg,31Dec2009

Steelprice

(CIS

Export

HR

Coil

$/tonne) Copper

price

and

inventories

COMMODITIES

0

20

40

60

80

100

120

140

160

'01 '02 '03 '04 '05 '06 '07 '08 '09200

400

600

800

1,000

1,200

1,400

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Inventories,TroyOz(rsc) Price,$/oz(lsc)

200

10,200

20,200

30,200

40,200

50,200

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

20,000

40,000

60,000

80,000

100,000

120,000

Inventories,tonne(rsc) Price,$/tonne,(lsc)

0

200

400

600

800

1,000

1,200

'01 '02 '03 '04 '05 '06 '07 '08 '091,200

3,200

5,200

7,200

9,200

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

200,000

400,000

600,000

800,000

1,000,000

Inventories,tonne(rsc) Price,$/tonne(lsc)

1,200

1,700

2,200

2,700

3,200

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

Inventories,tonne(rsc) Price,$/tonne(lsc)

14


15/29



BalticDry

Index

and

HSBC

Global

Steel

Index Selected

Reuters

commodity

indices

Source:Bloomberg, 31Dec2009


Palladiumpriceandinventories SilverpriceandinventoriesPlatinumpriceandinventories


COMMODITIES

300

800

1,300

1,800

2,300

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

500

1,000

1,500

2,000

2,500

3,000

Inventories,50troyoz(rsc) Price,$/oz(lcs)

0

300

600

900

1,200

'01 '02 '03 '04 '05 '06 '07 '08 '09

0

2,000

4,000

6,000

8,000

10,000

12,000

Inventories,100troyoz(rsc) Price,$/oz(lcs)

0

5

10

15

20

25

'01 '02 '03 '04 '05 '06 '07 '08 '09

80,000

90,000

100,000

110,000

120,000

130,000

140,000Inventories,$/'000troyoz(rsc)Price,$/oz(lcs)

1,800

200

2,200

4,200

6,200

8,200

10,200

12,200

'01 '02 '03 '04 '05 '06 '07 '08 '09100

100

300

500

700

900

1,100

1,300

1,500

BalticDryIndex(lsc)

GlobalSteelHSBCIndex(rsc)

150

300

450

600

750

900

'01 '02 '03 '04 '05 '06 '07 '08 '09

150

250

350

450

550

CRBSpotmetalsCRBSpotallcommodities(rsc)CRBRawIndustrials

15


16/29

RealRUB/USDandRUB/EURexchangerates(Dec97=100)OfficialRUB/USDandRUB/EURexchangerates

Source:CBR

Source:CBR,Bloomberg,13Jan2010 Source:CBR,Bloomberg, 13Jan2010

Source:CBR,Atonestimates

1MchangeinmajorEMandfrontiermarketcurrencies(%) 12MchangeinmajorEMandfrontiermarketcurrencies(%)

CURRENCIES

3.7%3.3%

2.9%2.2%

1.8%1.8%1.7%

1.5%1.4%

1.1%0.6%0.6%

0.2%0.1%0.1%

0.0%0.7%

1.9%

5% 4% 3% 2% 1% 0% 1% 2% 3%

TurkeyKorea

IndonesiaRussia

PolandHungaryS.Africa

MalaysiaMexicoTaiwan

KazakhstanPhilippines

ThailandArgentina

BrasilChina

EstoniaCzech

appreciation depreciation

24.1%

17.5%10.6%

7.1%6.3%6.0%5.8%4.9%

3.7%3.5%3.4%3.3%3.0%

0.7%9.9%

0.0%

22.5%

22.4%

30% 20% 10% 0% 10% 20%

BrasilS.Africa

IndonesiaKorea

MexicoCzech

PolandTurkey

ThailandEstonia

PhilippinesMalaysiaHungary

TaiwanChina

RussiaArgentinaKazakhsta

appreciation depreciation

20

25

30

35

40

45

50

2003 2004 2005 2006 2007 2008 2009

RUB/USD RUB/EUR Rub/basket

70

90

110

130

150

2003 2004 2005 2006 2007 2008 2009

RealRUB/USD RealRUB/EUR

16


17/29

PolicyrateinBRIC(%):TheCBRiscurrentlythe

onlycentral

bank

in

the

BRIC

to

remain

in

easing

mode.

5YCDS

spread

change

since

2008

crisis

peak

level

(bpts)

Source:Bloomberg, 13Jan2010

Russia'sCDS

spread

(bpts)

Source:Bloomberg,13Jan2010Source:Bloomberg,13Jan2010

Current5Y

CDS

spreads

by

country

(bpts)

Monetarypolicyrates;levelsandchangefromprecrisis

peak(%):

Together

with

Brazil,

Russia

currently

has

the

highestinterestrateintheEMspace.

KeyratedifferencewithUSFedFundsRates(%):

Russiaand

Brazil

also

see

the

biggest

differentiantial

vstheFedFundsrate.

Source:CBR,Bloomberg Source:CBR,Bloomberg Source:CBR,Bloomberg

INTERESTRATES/RISKINDICATORS

164.5

100

300

500

700

900

1100

1300

Aug08 Oct08 Jan09 Apr09 Jul09 Oct09

164.5

0 50 100 150 200

MalaysiaThailand

PhilippinesSouthAfrica

CzechRepublicIndonesia

PolandCroatiaArgentina

EstoniaMexico

RussiaTurkey

KoreaKazakhstan

BrasilBulgaria

ChinaHungary

0.61.82.02.0

3.54.04.5

4.86.36.5

7.07.0

8.88.8

5.22.5

3.31.5

2.52.0

3.8

4.3

5.310.3

4.05.05.0

4.3

15 10 5 0 5 10

BulgariaChinaKorea

MalaysiaPoland

PhilippinesMexico

IndiaHungary

TurkeyKazakhstan

S.AfricaBrasil

Russia

Current

rates

Change

sincepre

crisispeak0.3

1.61.81.8

3.33.8

4.34.5

6.06.3

6.86.8

8.58.5

0 2 4 6 8 10

BulgariaChinaKorea

MalaysiaPoland

PhilippinesMexico

IndiaKazakhstan

S.AfricaHungary

TurkeyBrasil

Russia

948.9

1500 1200 900 600 300 0

ChinaCzech

PolandBrasil

HungaryThailandMalaysia

MexicoCroatiaBulgaria

KoreaSouth

EstoniaTurkey

PhilippinesRussia

IndonesiaKazakhsta

0

2

4

6

810

12

14

16

18

20

2005 2006 2007 2008 2009

Russia

Brazil

Indi

China

17


18/29


19/29

QuarterlyGDPrealgrowthrate(%YoY): In3Q09

RussianGDP

shrank

by

8.9%,

an

improvement

on

a

10.9%contractionin2Q09.Nominal

GDP

(RUBbn):

Russia's

nominal

GDP

equalled

RUB10.5trnin3Q09.

BRICGDPgrowth(%YoY):WithintheBRIC

quartetRussia

saw

the

largest

GDP

decline

in

9M09.

GDPrealgrowthratein9M09(%YoY):Witha9.9%contractioninGDPin9M09Russia

isoneoftheworstaffectedeconomiesfromtherecession.

2010GDPgrowthestimate(%):WesuggestthatRussianGDPmayoutperformin2010

(+5.8%)vsitspeers,althoughmainlyduetoabaseeffect.

Source:Rosstat,Bloomberg

Source:Rosstat,BloombergSource:Rosstat Source:Rosstat

Source:IMF,*Atonestimates

THEECONOMY

15.69.9

8.67.1

1.71.31.20.9

0.30.5

0.70.70.91.2

2.04.2

6.7 7.6

20 15 10 5 0 5 10

EstoniaRussia

TurkeyHungary

KazakhstanMexico

ThailandSouth

ArgentinaBrazil

TaiwanPhilippines

MalaysiaPoland

KoreaIndonesia

IndiaChina

2.60.9

0.9721.5

1.7

2.22.5

3.23.3

3.53.63.73.73.7

5.86.4

9

2.0

5 3 1 1 3 5 7 9

EstoniaHungary

PhilippinesArgentina

SouthAfricaKazakhstan

PolandMalaysia

IndonesiaMexico

BrazilKorea

TaiwanThailand

TurkeyRussia*

IndiaChina

15%

10%

5%

0%

5%

10%

15%

1Q00 4Q01 3Q03 2Q05 1Q07 4Q08

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1Q05 1Q06 1Q07 1Q08 1Q09

13

8

3

2

7

12

'01 '02 '03 '04 '05 '06 '07 '08 '09

Brazil China India Russia

19


20/29

PMI:TheservicePMIremainscomfortablyabove

50(expansion)

while

the

manufacturing

PMI

postedareadingbelow50inDec09.

Unemploymentrate

(%):

After

arather

surprising

fall

inunemploymentduringmostof2009,ithasrisento

8.1%inNov.

Source:Rosstat Source:Rosstat

Structureofinductrialproduction(%YoY):Mining

andbasic

services

resumed

positive

growth

in

Nov

09.

IndustrialproductionandFixedinvestment(%YoY):

Avisible

recovery

in

IP

and

fixed

investment.

In

Nov

09

IPreturnedtopositiveYoYgrowth.

Source:Rosstat,Atonestimates

Source:VTB

Realdisposable

income,

Real

wage,

Retail

sales

(%

YoY):Recentdataarepointingtoarecoveryin

demandrelatedindicators.

Fixedinvestment

(%/GDP):

Fixed

investment

as

a

percentageofGDPhashoveredaround20%,one

ofthelowestintheEMspace.

Source:Rosstat Source:Rosstat

THEECONOMY

25%

15%

5%

5%

15%

25%

'00 '01 '03 '04 '06 '07 '09

IndustrialProduction FixedInvestment

15%

5%

5%

15%

25%

'00 '01 '03 '04 '06 '07 '09

RealDisposableIncomeRealWageRetailSales

25%

15%

5%

5%

15%

25%

'02 '03 '05 '06 '08 '09

Mining Manufacturing BasicServices

0

5

10

15

20

25

1Q95 1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09

5%

6%

7%

8%

9%

10%

11%

12%

13%

'00 '01 '03 '04 '06 '07 '09

30

35

40

45

50

55

60

65

Jan07 Jul07 Jan08 Jul08 Jan09 Jul09

Services

Manufacturing

20


21/29

Source:MinistryofFinance,Rosstat

FederalBudget(%/GDP):Despitearecoveryintheoilpriceahikeinspending,related

tofiscal

stimulus

efforts,

means

that

the

budget

balance

remains

in

the

red

(5.1%

of

GDPinNov09).

FederalBudgetbalanceandReserve+WellbeingFunds(%/GDP):Oilpricerebound

haltsdepletion

of

fiscal

funds.

In

Nov

09

the

combined

Reserve

and

National

Wellbeing

Fundsequalled12.1%ofGDP.

Source:MinistryofFinance,Rosstat

GrossandnetFDI($bn):OverthelasttworeportedquartersRussiahasseenan

increaseininwardFDI.In3Q09,itamountedto$12bn,down29%YoY.

Currentaccountbalance(%/GDP):Thecurrentaccountsurplusreached3.6%ofGDPin

9M09(4.4%ofGDPin3Q09,down50%YoY).

Source:CBRSource:CBR

THEECONOMY

20%

10%

0%

10%

20%

30%

2004 2005 2006 2007 2008 2009

Deficit ReserveFund+WellbeingFund

20%

10%

0%

10%

20%

30%

40%

2004 2004 2005 2006 2007 2007 2008 2009

Revenues Spending Balance

15

10

5

0

510

15

20

25

1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09

GrossFDI NetFDI

0

5

10

15

20

25

1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09

21


22/29

Internationalreservesvstotalexternalshortterm

debt(%):

Russia's

total

external

short

term

debt

is

coveredeighttimesbyitsinternationalreserves.

Internationalreserves

coverage,

no.

of

months:

In

Nov09Russia'sIRcoveredmorethan20monthsof

imports(4monthsisconsideredadequate).

M2/Internationalreserves

(%):

Russia's

M2

is

almost

fullycoveredbyitsinternationalreserves(excluding

gold)

Externaldebt/GDP(%):Russia'sexternaldebt

situationis

undemanding

with

total

debt

equal

to

35%

ofGDPandgovernmentdebtonly2%ofGDP.

Externaldebt/Exportrevenue(%):Equally,the

debtlevel

when

set

against

export

revenues

remainslow.

Source:CBRSource:CBR,Rosstat Source:CBR

Source:CBR

Exportsand

imports

($bn):

Both

exports

and

imports

haverecovered.Thetradesurplusreached$11.6bnin

Nov09and$99.8bnfor11M09.

Source:CBRSource:CBR

THEECONOMY

0%

10%

20%

30%

40%

50%

1Q05 1Q06 1Q07 1Q08 1Q09

General Government

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009

0%

40%

80%

120%

160%

200%

1Q05 1Q06 1Q07 1Q08 1Q09

General Government

0%

30%

60%

90%

120%

150%

180%

2004 2005 2006 2007 2008 2009

0%

200%

400%

600%

800%

1Q05 1Q06 1Q07 1Q08 1Q09

0

10

20

30

40

50

'00 '02 '04 '06 '08

Exports Imports

22


23/29

Source:Rosstat Source:Rosstat,Bloomberg

Source:CBR,Rosstat

Source:CBR,Rosstat

PPIand

oil

price

(%

YoY):

The

recent

uptick

in

producerpriceinflationappearsrelatedtotheoil

pricerecovery.

M2velocity

(GDP/M2):

Velocity

of

M2

has

been

rising

recently,causedbyroublevolatilityandasharper

dropinGDPrelativetomoneysupply.

Inflation,(%YoY):CPIhasfallenamidcontracting

demand,reaching8.8%byDec09.PPIhasrisenlately

M2/GDP(%,3MAve.):Russia'smonetisationofthe

economyremainslowatjustabove30%(atNov09).

YoYgrowthofM2andM0minusYoYGDPgrowth(%):

M2is

again

growing

slightly

faster

than

GDP,

with

Russia

creapingbackintoexcessliquidityterritory.

MonetaryaggregatesM2,M0,YoY(%):M2showed

slightpositive

YoY

growth

in

Nov

09

while

M0

is

still

in

decline.

Source:CBR Source:CBR,Rosstat

THEECONOMY

15%

5%

5%

15%

25%

35%

45%

55%

65%

'00 '02 '04 '06 '08

M2 M0

80%

60%

40%

20%

0%

20%

40%

60%

1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09

M2GRGDPGR M0GRGDPGR M2/GDP

0%

5%

10%

15%

20%

25%

30%

35%

40%

'00 '02 '04 '06 '08

M2/GDP

2

3

4

5

6

7

8

9

10

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '0920%

10%

0%

10%

20%

30%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09

ConsumerPriceIndex ProducerPriceIndex

60%

40%

20%

0%

20%40%

60%

80%

100%

'04 '05 '06 '07 '08 '09

20%

10%

0%

10%

20%

30%

40%

Urals(lsc) PPI(rsc)

23


24/29

Source:CBR,Rosstat Source:CBRSource:CBR

Source:CBR Source:CBR Source:CBR

Nominaldeposit

and

credit

rates

(%):

Banks

have

loweredinterestratesoncreditasaresponsetoCBR

easing;depositrateshaveyettoreact.

Realdeposit

and

credit

rates

(%):

On

the

back

of

lower

inflationthedepositrateismovingtowardspositive

territory.

Nonperforming

loans

(%/total

loans):

The

aggregateNPLratiocontinuestogrow,printing

6.4%inNov09.

Loan/depositratio(%):Theaggregateloan/deposit

ratiohas

been

declining

as

the

rise

in

deposits

has

outpacedcreditgrowth.

Loans,Depositsinroubles(%YoY):Depositsgrew

19.5%in

Nov

09

while

the

slowdown

in

credit

growth

washalted.

Loans,Depositsindollars(%YoY):Indollarterms

thegrowth

in

deposits

was

less

pronounced

and

creditsarestilldeclining.

THEECONOMY

80%

90%

100%

110%

120%

2006 2007 2007 2008 2008 2009

0%

1%

2%

3%

4%

5%

6%

7%

Dec07 May08 Oct08 Mar09 Aug09

0%

3%

6%

9%

12%

15%

18%

Jan07 Jul07 Jan08 Jul08 Jan09 Jul09

Deposits Credits

10%

7%

4%

1%

2%

5%

'04 '05 '06 '07 '08 '09

Deposits Credits

10%

0%

10%

20%

30%

40%

50%

60%


TotalDepositsRUB,YoY TotalLoansRUB,YoY

30%

10%

10%

30%

50%

70%


TotalDeposits,$YoY TotalLoans,$YoY

24


25/29


26/29


27/29

KEYINDICATORS 2003 2004 2005 2006 2007 2008 2009E 2010ENominalGDP(RUBbn) 13,243 17,048 21,625 26,904 33,112 41,668 38,899 46,475

GDP($n) 432 592 764 989 1,294 1,677 1,196 1,518

GDPpercapita($) 2,984 4,116 5,342 6,943 9,109 11,808 8,457 10,776

RealGDPgrowth,(%) 7.3 7.1 6.4 7.4 8.1 5.6 7.7 5.8

Industrialoutputgrowth,(%) 8.9 8.0 5.1 6.3 6.4 2.6 9.2 5.2

Fixedinvestment (%) 12.1 14.6 10.0 15.6 22.9 13.2 14.5 5.0

Realretailsales(%) 8.8 12.1 12.8 13.9 16.0 14.0 4.4 7.3

SOCIALINDICATORS

Realdisposableincome (%) 15 11 12 13 12 3 1 8

Realwage(%) 10.3 11.2 9.9 13.4 16.2 11.0 2.8 7.0

Averagewage($/month) 180 237 302 396 531 694 575 731

Uneployment,(%

ILO) 8.6 8.2 7.6 7.2 6.1 6.4 10.3 8.7

PRICES

CPIgrowth(%Dec/Dec) 12.0 11.7 10.9 9.0 11.9 13.3 8.8 8.0

PPIgrowth(%Dec/Dec) 13.0 28.9 18.2 4.9 25.1 7.0 8.5 12.0

TRADE

Exports($n) 135.9 183.2 243.8 303.6 354.4 471.6 300.2 362.5

Imports($bn) 76 97 125 164 223 292 208 264

Tradebalance($bn) 59.9 85.8 118.4 139.3 130.9 179.7 92.0 98.2

Currentaccount($bn) 35.4 58.6 84.6 94.7 77.0 102.3 46.0 58.9

Currentaccountratio(%/GDP) 8.2 9.9 11.1 9.6 5.9 6.1 3.8 3.9

Oilprice

($/bbl,

Urals

Med,

aop) 27 34 50 61 69 95 58 73

FEDERALBUDGET

Revenues,(%/GDP) 20 20 24 23 23 22 18 17

Expenditures(%/GDP) 17.8 15.8 16.3 15.9 18.1 18.2 25.7 21.1

Fiscalbalance(%/GDP) 1.7 4.3 7.5 7.4 5.4 4.1 7.6 4.0

MONETARYINDICATORS

Grossinternationalreserves($bn) 77 125 182 304 479 427 377 398

M0(RUBbneop) 1,147 1,535 2,009 2,785 3,702 3,795 4,057 4,960

M0growth(%) 50.3 33.8 30.9 38.6 32.9 2.5 6.9 22.2

M2(RUBbn

eop) 3,213 4,363 6,046 8,996 13,272 13,493 14,700 17,714

M2growth(%) 50.5 35.8 38.6 48.8 47.5 1.7 8.9 20.5

M2/GDP(%average) 19.3 21.4 22.9 26.4 32.5 32.8 33.4 33.4

EXCHANGERATES

RUB/$(eop) 29.5 27.7 28.8 26.3 24.6 29.4 31.3 30.0

RUB/$(aop) 30.7 28.8 28.3 27.2 25.6 24.9 32.5 30.6

RUB/(eop) 36.8 37.8 34.2 34.7 35.9 41.4 44.0 43.7

R/(aop) 34.7 35.8 35.2 34.1 35.1 36.4 44.2 43.9

Realappr.(+)/depr.()RUB/$(%) 18.6 14.8 3.4 16.2 15.3 5.4 3.8 10.5

Realappr.(+)/depr.()RUB/,(%) 1.3 6.3 20.0 5.4 4.8 3.3 3.2 7.4

Source:Rosstat,

CBR,

Ministry

of

Finance,

Bloomberg,

Aton

estimates

Macroeconomicforecast


28/29


29/29

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