Archives for February 2015

Reuters / China Daily

Russia may consider granting Chinese investors over 50 percent stakes in its strategic hydrocarbon fields, Russia’s Deputy Prime Minister Arkady Dvorkovich has said.

“If there is a request from China, we will seriously consider it. And I see no political obstacles at the moment,” Dvorkovich said Friday at the Krasnoyarsk Economic Forum, adding that fields on the Arctic continental shelf are an exception.

Russia and China are on the verge of a major breakthrough in terms of investment, not just trade, and are ready to deepen their economic ties. A strategic partnership and a mutual interest in new industries make China an obvious investor in Russia, says the deputy prime minister.

“We have a strategic partnership with China and now decisions are made much faster than before. In particular, we have a gas contract; a second one will be signed soon. Now we know China better: their motives and intentions are understood. There used to be a psychological barrier. Now it doesn’t exist anymore. We are interested in maximizing investments in new industries. China is an obvious investor for us,” Arkady Dvorkovich said at the conference in Krasnoyarsk.

READ MORE: Russia and China seal historic $400bn gas deal

In May 2014, Russian gas major Gazprom and China’s CNPC signed a $400 billion contract to supply 38 billion cubic meters of gas per year to China for 30 years via the Power of Siberia pipeline.

READ MORE: Putin, Xi Jinping sign mega gas deal on second gas supply route

In November, Moscow and Beijing signed a memorandum on an additional pipeline, the so-called Western route, which is to run from gas fields in Western Siberia via the Altai gas pipeline. These direct supplies are planned to start in 2019.

Chinese investors are interested in the Russian agriculture, the processing of natural resources, and retail and logistics, according to Dvorkovich who had also mentioned the Moscow-Kazan high-speed railway project. China plans to build a $242 billion high-speed rail link between Beijing and Moscow with a Moscow to Kazan branch.

READ MORE: Moscow to Beijing in 2 days: China to build $242bn high-speed railway

“We’re not just discussing, we are talking about absolutely specific projects and concrete things with our partners,” the deputy prime minister said.

The two countries are looking forward to boosting cooperation in various areas such as finance, aviation and space along with improving trade and economic cooperation.

Article source: http://rt.com/business/236211-russia-china-oil-gas/

Reuters / Ismail Zitouny

Despite being the biggest crude oil producer, the United States won’t be able to export more than the current world leader Saudi Arabia, says the new head of the International Energy Agency (IEA) Fatih Birol.

“The United States will never be a major oil exporter. Their import needs are getting less but the US is not becoming Saudi Arabia,” Birol told The Telegraph’s Middle East Congress.

“Their production growth is good to diversify the market but it will not solve the world’s oil problems,” he added.

Although the US shale boom was “excellent news” for the American economy, it wouldn’t see the country meet the global energy needs, he said.

Gulf exporters would continue to dominate world oil production in the coming years, although energy production outside OPEC last year reached its highest level in three decades, he said, adding that such OPEC members as Saudi Arabia and Iraq would be the main countries to satisfy global demand over the next decade.

“Only the Middle East can fill the gap in oil production when new players, such as the US, Canada and Brazil see their production slow down,” said Birol, adding that the region had become the third largest contributor to the growth in global oil demand.

The oil price has lost more than 50 percent since summer 2014. The situation became worse when OPEC countries refused to cut output in November in an attempt to protect their share of the global energy market. The Saudi oil minister then said his country won’t cut oil production even if prices fall below $20.

READ MORE: $20 oil wouldn’t force production cut – Saudi oil minister

Oil revenues of Middle East countries were $1 trillion in 2014. According to the IEA, lower prices are expected to see them cut by more than half to $400 billion.

However, the price of Brent crude has been stabilizing at roughly $60 per barrel, and traded at $61.27 per barrel at 12:15pm MSK. The price dived below $45 per barrel in January this year.

Article source: http://rt.com/business/236055-us-not-saudi-arabia/

GERMAN BUNDESTAG VOTES 542 IN FAVOR OF EXTENSION; 32 REJECT

— Jonathan Ferro (@FerroTV) February 27, 2015

German Chancellor Angela Merkel also supported the extension, but many members of her own Christian Democratic party (CDU) were critical of further extensions to the Greek bailout in the last weeks. The main opposition party, the Green, had seconded the motion too.

Other EU countries will also vote on the plan approved by the European Commission on Tuesday, but the vote of Germany , Greece’s main creditor, makes the overall approval almost certain. Germany has been the biggest advocate of Greece complying with its obligations and paying off its €317 billion debt. The newly elected government in Greece has promised to end the era of austerity in the country.

READ MORE: Eurozone backs Greek reforms, enabling €172bn rescue extension

The eleventh hour plan presented to the EU creditors late last Friday includes commitments to fight corruption and tax evasion, as well as cut all unnecessary expenditure and keep on with its privatization plans.

Speaking to the parliament ahead of the vote, Finance Minister Wolfgang Schauble promised Greece would not be allowed to “blackmail” its eurozone partners. Germany’s approval to extend the bailout to Greece was not an easy one, but in both countries’ best interest, he said.

“Germany will only have a good future if European unification is successful and if we in Europe stand together.”

The decision on the program’s extension didn’t mean making any adjustments to it, Finance Minister added.

“We’re not talking about new billions for Greece, we’re not talking about any changes to this program – rather it’s about providing or granting extra time to successfully end this program,” he said.

Schauble warned that “Greece must do its part. Solidarity of course, also has something to do with reliability.”

Greece started to receive bailout packages from the so-called troika of international creditors in 2010, with total loans since then worth €246 billion.

The money has been provided with strict terms which include the introduction of austerity measures and drastic budget cuts. As a result, in the four years of austerity Greece’s GDP has slumped a quarter to €242 billion. A third of Greeks live below the poverty line and the unemployment rate has reached 30 percent.

The newly elected Greek government pledged to end the EU bailout program. If the talks failed it could have meant a so-called Grexit –or Greece leaving the eurozone.

Increasing outrage

Meanwhile, people in Greece have been frustrated with the new plan. On Thursday night Athens faced the first protests against Greece’s newly elected anti-austerity government. Demonstrators took to the streets because they said Prime Minister Alexis Tsipras and his cabinet had failed to fulfill their anti-austerity election pledge.

#Greece: First #protests against #Syriza policies in #Athenshttp://t.co/tTXV0aDsU9pic.twitter.com/rP6scFEFQ9

— Newzulu UK (@NewzuluUK) February 27, 2015

Germany has also seen an increasingly vocal opposition to giving Greece its own way out of the crisis with people protesting on the streets and in the media.

#Germany‘s BILD-Zeitung campaign says Print out and make a Selfie – “NEIN! No further billions to the greedy Greeks!” pic.twitter.com/32O0UHpVYG

— Antonio Miloshoski (@AMiloshoski) February 27, 2015

The new government in Greece wants to escape the Troika conditions which are very specific in terms of reforms the Greek government has to carry out, Hans-Werner Sinn President of the German IFO institute for economic research told RT.

“They want to increase the minimum wages, they want to increase the pensions, they want to hire more people – this is all not in line with the original agreement,” he said. “I mean, this is a voluntary offer by others to the Greek people to help them, and if they don’t want it, they don’t want it. But they cannot say ‘we want it with better conditions,’ you know, it’s a bit strange.”

Article source: http://rt.com/business/236135-greece-germany-loan-extension/

Sergei Kupriyanov.(Reuters / Maxim Shemetov )

Ukraine’s Naftogaz has paid Gazprom $15 million for gas delivery. At current levels, the prepayment covers one day’s gas consumption and will be spent by Tuesday, Gazprom spokesperson Sergey Kupriyanov said.

“Today at 9:20am MSK Gazprom received a payment from Ukraine’s Naftogaz in the amount of $15 million. At the current level of supply this sum will be enough roughly for one day,” he said.

“If Naftogaz paid for another 24 hours, it means the resources would last through Monday till Tuesday,” he said.

The relatively small prepayment suggests Kiev is buying time before trilateral talks in Brussels on march 2nd. Russian energy minister Alexander Novak had warned Kiev’s failure to pre-pay would mean a cut-off.

READ MORE: Putin: Gas supplies to Europe could suffer in 3-4 days if Kiev doesn’t pay

In a letter sent to Gazprom late Wednesday, Naftogaz said it had a total of 206 million cubic meters of Russian gas pre-paid.

“The concerns and worries are caused first of all by the fact that not much prepaid gas is left. If there is no money the supplies will stop starting from Tuesday,” Russian Energy Minister Alexander Novak said Friday, as cited by TASS news agency.

“The payment should be completed Friday so that the gas is supplied starting from Tuesday,” Novak said. “If there is no payment there will be a break in gas supplies to Ukraine. The European consumers will fully receive gas.”

“We are worried about the situation with the problem of prepayment for the gas delivery. On Friday morning, the rest of the gas, prepaid by Ukraine, accounted for 123.8 mln cubic meters. Taking into consideration the fact that on the average we supply [Ukraine] with 42 mln cubic meters, without DPR and LPR [Donetsk People’s Republic and Lugansk People’s Republic], in fact, the remains of the gas will be enough only for Friday, Saturday, and Sunday,” Novak said, according to RIA-Novosti.

In a new gas standoff, deliveries to the conflict-plagued Donbass region have become a new bone of contention between Russian and Ukraine. Last week Kiev suspended deliveries to the area, citing damage to the pipeline. Russia then launched a separate gas supply to Donbass, with President Vladimir Putin saying that cutting the war zone off gas “smells like genocide.” Gazprom said Thursday it was ready to separate gas supplies to Ukraine and Donbass.

READ MORE: Gazprom to consider separating Donbas gas supplies from Ukraine

Ukraine also accuses Gazprom for breaching the contract terms, insisting Russia was delivering less then Kiev requested. It said that on February 22 and 23 it received 47 million and 39 million cubic meters respectively, while it asked for 114 million cubic meters. Gazprom says it fulfills all of its contractual obligations.

The data from Ukrainian gas transmission system operator Ukrtransgaz shows that Ukraine collected 488,106 million cubic meters of Russian gas in December last year, which increased to 920,314 million in January, and soared to 772,272 billion cubic meters between February 1 and February 25 this year.

The gas row comes as Ukraine’s economy plunges into a full-blown crisis. A year of Maidan unrest dragged GDP to -6.5 percent last year and saw the national currency, the hryvnia, lose about 75 percent.Naftogaz head Andrey Kobolev also admitted that his company has been teetering on the brink of bankruptcy since 2009.

Earlier this month, the International Monetary Fund (IMF) agreed to provide a $17.5 billion bailout package to Ukraine, which requires Kiev to reform its economy and cut expenses.

Article source: http://rt.com/business/236019-gazprom-naftogaz-russsia-gas/

Reuters / Jim Urquhart

The crude oil price collapse has forced some Canadian oil service companies to cut their workforces, budgets, and salaries, as their energy-producing customers have been struggling with their own budget cuts and market uncertainty.

Calfrac Well Services Ltd. and Trican Well Service Ltd., both based out of Calgary, are two of the most recent examples of companies showing signs of a struggle amid a slowdown in drilling activity across North America.

Oilfield services and hydraulic fracturing company Calfrac announced on Wednesday that it will cut over $25 million from its general and administrative costs, as it released its fourth quarter revenue report.

The firm will be slashing executive salaries by around 10 percent and directors’ pay by 20 percent starting in April. Calfrac was also forced to shut down its operations in Colombia.

“As a result of the decline in crude oil prices, the company’s customers in Canada and the United States have lowered their 2015 capital budgets in the order of 20 to 40 per cent from 2014,” Calfrac’s president and chief executive, Fernando Aguilar, told analysts.

The biggest concern is how cheaper crude will impact equipment utilization and pricing in 2015. “Customers are taking a cautious approach until there is more certainty as to when oil prices will recover,” Aguilar added.

One of Calfrac’s biggest competitors, Trican, announced similar cuts – including slashing salaries and costs – after cutting 600 positions. All Canadian and US employees will receive a 10 percent cut in average compensation, according to the firm’s press release.

Oil prices have plummeted by at least 50 percent since the summer. The situation was made worse when the Organization of Petroleum Exporting Countries (OPEC) opted not to cut its daily output levels in November.

In reaction to new oil price projections, the Bank of Canada (BoC) unexpectedly cut its interest rate to 0.75% in January, with markets pricing in another rate cut in March. The central bank also lowered its economic growth and inflation forecasts, warning of widespread negative effects of lower oil prices on the Canadian economy.

Just last week, BoC Deputy Governor Agathe Cote stressed the significance of the oil-price shock.

“This shock will delay the economy’s return to full capacity by undermining both investment in the oil sector and gross domestic income,” she said, noting that personal wealth is likely to be reduced and interprovincial trade affected.

Article source: http://rt.com/business/235951-crude-prices-canadian-companies/

Reuters/Philippe Wojazer

The people’s republics of Donetsk and Lugansk will introduce a multi-currency financial system using the US dollar, euro and yuan. This is to shield against the free fall of the domestic currency, the hryvnia, and the “economic blockade” by Kiev.

“As Ukraine is not going to lift the economic blockade as agreed, as the Ukrainian currency has depreciated to such an extent that large city stores are becoming sold out, I inform you that we decided to launch a multi-currency system in our country,” said Igor Plotnitsky, head of self-proclaimed People’s Republic of Lugansk, as quoted by TASS. “We will use the ruble, the hryvnia, the dollar and other currencies convenient for us.”

The Ukrainian hryvnia has lost about 75 percent of its value since the crisis started a year ago, and on Thursday is trading around 33 to the US dollar.

Plotnitsky said this will be a “temporary measure”until it becomes clear whether the republic will use the hryvnia in future, or look for other options.

The self-proclaimed Republic of Donetsk has already put several foreign currencies into circulation.

“We allow several currencies – dollars, as well as euro and Chinese yuan,” said the Donetsk Republic envoy Denis Pushilin at a news conference. He said printing their own currency is a very expensive process and it’s not worth it at present.

“This is a very expensive, long-term project. It is important to understand what it will be supported with. We have enough serious threats that don’t let us consider the question [of printing own currency – Ed.] right now,” he said.

Pushilin accused Kiev of strengthening the economic blockade, saying there is now way to get goods other than via humanitarian aid. He also blamed Kiev for impeding supplies of normally priced medicine.

READ MORE: Kiev introduces rationing, as falling hryvnia causes shopping binge

Despite the tense economic situation in the region, the self-proclaimed Donetsk Republic isn’t going to be always dependent on humanitarian assistance, Pushilin added.

“We’ve got economic potential. The enterprises on our territory have this potential. We’ve already declared the mechanism of getting out of the difficult economic situation,” he said suggesting that Russian businesses build ties with Donetsk industry.

The head of the Donetsk Republic Aleksandr Zakharchenko will supervise pricing policies in the region.

“Zakharchenko will take over the control of the food basket and the state’s pricing policy in connection with the collapse of the hryvnia,” said the head of the Donetsk administration Maxim Leshtchenko, adding that the republic considering settling payments with Russia in rubles.

Article source: http://rt.com/business/235747-donetsk-lugansk-currency-market/

Reuters/Philippe Wojazer

The people’s republics of Donetsk and Lugansk will introduce a multi-currency financial system using the US dollar, euro and yuan. This is to shield against the free fall of the domestic currency, the hryvnia, and the “economic blockade” by Kiev.

“As Ukraine is not going to lift the economic blockade as agreed, as the Ukrainian currency has depreciated to such an extent that large city stores are becoming sold out, I inform you that we decided to launch a multi-currency system in our country,” said Igor Plotnitsky, head of self-proclaimed People’s Republic of Lugansk, as quoted by TASS. “We will use the ruble, the hryvnia, the dollar and other currencies convenient for us.”

The Ukrainian hryvnia has lost about 75 percent of its value since the crisis started a year ago, and on Thursday is trading around 33 to the US dollar.

Plotnitsky said this will be a “temporary measure”until it becomes clear whether the republic will use the hryvnia in future, or look for other options.

The self-proclaimed Republic of Donetsk has already put several foreign currencies into circulation.

“We allow several currencies – dollars, as well as euro and Chinese yuan,” said the Donetsk Republic envoy Denis Pushilin at a news conference. He said printing their own currency is a very expensive process and it’s not worth it at present.

“This is a very expensive, long-term project. It is important to understand what it will be supported with. We have enough serious threats that don’t let us consider the question [of printing own currency – Ed.] right now,” he said.

Pushilin accused Kiev of strengthening the economic blockade, saying there is now way to get goods other than via humanitarian aid. He also blamed Kiev for impeding supplies of normally priced medicine.

READ MORE: Kiev introduces rationing, as falling hryvnia causes shopping binge

Despite the tense economic situation in the region, the self-proclaimed Donetsk Republic isn’t going to be always dependent on humanitarian assistance, Pushilin added.

“We’ve got economic potential. The enterprises on our territory have this potential. We’ve already declared the mechanism of getting out of the difficult economic situation,” he said suggesting that Russian businesses build ties with Donetsk industry.

The head of the Donetsk Republic Aleksandr Zakharchenko will supervise pricing policies in the region.

“Zakharchenko will take over the control of the food basket and the state’s pricing policy in connection with the collapse of the hryvnia,” said the head of the Donetsk administration Maxim Leshtchenko, adding that the republic considering settling payments with Russia in rubles.

Article source: http://rt.com/business/235747-donetsk-lugansk-currency-market/

Reuters/Valentyn Ogirenko

Gazprom wants Ukraine’s Naftogaz to confirm it is refusing to prepay for gas, as long as Russia supplies fuel to Donbass. If Kiev doesn’t pay, Russia may stop supplying Ukraine by Saturday.

The head of Gazprom Aleksey Miller sent a letter to the head of Naftogaz Andrei Kobolev Wednesday, in which he demanded confirmation from Kiev that the latest prepayment for Russian gas would only be made should Gazprom stop supplying the Donbass region, reports Kommersant.

Gas is being supplied to Donetsk and Lugansk through the previously mothballed entry points at Prokhorovka and Platovo in south-eastern Ukraine.

Miller pointed out that the supply to Prokhorovka and Platovo is part of Gazprom’s contract with Naftogaz. The letter says Gazprom will not deliver gas to Ukraine without prepayment. According to the company Ukraine will have enough gas stockpiled to last until Saturday.

Formally, Kobolev didn’t waive prepayment for deliveries to Donbass, but on February 24 he said Naftogaz won’t pay in advance until it receives a performance guarantee from Gazprom over the contract and the winter package signed in Brussels in October 2014.

READ MORE: Russia, Ukraine agree on gas supplies until March 2015

A new gas standoff between Russia and Ukraine broke out last week when Kiev suspended gas supplies to Donbass, saying it was due to damage caused to the pipelines. After that Gazprom started supplying gas 12 million cubic meters of gas a day directly to the republics of Donetsk and Lugansk.

Read MORE: PM Medvedev orders commencement of gas deliveries to embattled Donbas

On Wednesday Russian President Vladimir Putin said that should Russia not get a prepayment from Kiev Moscow will stop its supplies which “may threaten transit to Europe.” He also assured that Gazprom is fully complying with the contract signed in 2009. He said the suspension of gas supply to a war zone by Ukraine “smells like genocide.”

“Either Ukrainian authorities consider it [Donbass – Ed.] their territory and bear the responsibility for the situation, or it isn’t so. Let them then openly say it.”

READ MORE: Putin: Gas supplies to Europe could suffer in 3-4 days if Kiev doesn’t pay

This followed a warning from Gazprom that if Kiev failed to pay for gas deliveries, this could create transit risks for Europe.

Ukraine has blamed Gazprom for not fulfilling the request by Naftogaz for 114 million cubic meters on February 22 and 23, and passed only 47 million and 39 million cubic meters. Kiev also said it won’t pay for gas delivered to Donetsk and Lugansk, saying it cannot verify whether the gas was supplied or not.

The European Commission proposed to discuss the possibility of separate accounting of gas supplies for Naftogaz and Donbass, according to European Commission Vice-President Maros Sefcovic. He said the European Commission is planning to convene a meeting with Russian and Ukrainian energy ministers shortly However, Gazprom is unlikely to make concessions, primarily for political reasons.

Article source: http://rt.com/business/235655-ukraine-delay-prepayment-gas/

Reuters/Valentyn Ogirenko

Gazprom wants Ukraine’s Naftogaz to confirm it is refusing to prepay for gas, as long as Russia supplies fuel to Donbas. If Kiev doesn’t pay, Russia may stop supplying Ukraine by Saturday.

The head of Gazprom Aleksey Miller sent a letter to the head of Naftogaz Andrei Kobolev Wednesday, in which he demanded confirmation from Kiev that the latest prepayment for Russian gas would only be made should Gazprom stop supplying the Donbas region, reports Kommersant.

Gas is being supplied to Donetsk and Lugansk through the previously mothballed entry points at Prokhorovka and Platovo in south-eastern Ukraine.

Miller pointed out that the supply to Prokhorovka and Platovo is part of Gazprom’s contract with Naftogaz. The letter says Gazprom will not deliver gas to Ukraine without prepayment. According to the company Ukraine will have enough gas stockpiled to last until Saturday.

Formally, Kobolev didn’t waive prepayment for deliveries to Donbas, but on February 24 he said Naftogaz won’t pay in advance until it receives a performance guarantee from Gazprom over the contract and the winter package signed in Brussels in October 2014.

READ MORE: Russia, Ukraine agree on gas supplies until March 2015

A new gas standoff between Russia and Ukraine broke out last week when Kiev suspended gas supplies to Donbas, saying it was due to damage caused to the pipelines. After that Gazprom started supplying gas 12 million cubic meters of gas a day directly to the republics of Donetsk and Lugansk.

Read MORE: PM Medvedev orders commencement of gas deliveries to embattled Donbas

On Wednesday Russian President Vladimir Putin said that should Russia not get a prepayment from Kiev Moscow will stop its supplies which “may threaten transit to Europe.” He also assured that Gazprom is fully complying with the contract signed in 2009. He said the suspension of gas supply to a war zone by Ukraine “smells like genocide.”

“Either Ukrainian authorities consider it [Donbas – Ed.] their territory and bear the responsibility for the situation, or it isn’t so. Let them then openly say it.”

READ MORE: Putin: Gas supplies to Europe could suffer in 3-4 days if Kiev doesn’t pay

This followed a warning from Gazprom that if Kiev failed to pay for gas deliveries, this could create transit risks for Europe.

Ukraine has blamed Gazprom for not fulfilling the request by Naftogaz for 114 million cubic meters on February 22 and 23, and passed only 47 million and 39 million cubic meters. Kiev also said it won’t pay for gas delivered to Donetsk and Lugansk, saying it cannot verify whether the gas was supplied or not.

The European Commission proposed to discuss the possibility of separate accounting of gas supplies for Naftogaz and Donbas, according to European Commission Vice-President Maros Sefcovic. He said the European Commission is planning to convene a meeting with Russian and Ukrainian energy ministers shortly However, Gazprom is unlikely to make concessions, primarily for political reasons.

Article source: http://rt.com/business/235655-ukraine-delay-prepayment-gas/

Reuters/Maxim Shemetov

The Russian ruble-denominated MICEX is currently the best performing index this year, with analysts expecting the growth streak to continue, despite rating downgrades, Western sanctions and the plunge in the oil price.

The MICEX has added 27 percent since the start of the year, outperforming some of the leading indices in Germany, France and Italy, MICEX confirmed in an e-mail to RT.

Russian analysts expect the growth to continue during the year. Aleksey Astapov of asset managers Arsagera expects the MICEX to hit 2,100 by the end of 2015, a huge jump from Thursday’s reading of 1,750. It’s close to the 2011 high, and a further rise could drive the index to its highest level since 2008.

The MICEX hasn’t given a forecast but said 2014 market volatility was largely spurred by oil prices and geopolitics, and that forced many foreign investors who had quit Russian stocks to change their attitude to the market in the second half of 2014 and the start of 2015.

“Our data shows that in the beginning of 2015 the overall net purchases of Russian shares by foreign investors were above $656 million (40 billion rubles),” MICEX said.

An expectation of corporate revenues in Russia is a key factor for index growth, according to Astapov. A combination of a weaker ruble, import substitution and the state support for some industries makes investors believe Russian firms would produce robust results, he said.

‘Black Tuesday’ that shook the Russian market and the currency in mid-December was just one single ‘episode’, according to Ivan Tchakarov, a chief economist at Citibank Russia, while investors need to take a broader, more impassionate view.

READ MORE: Ruble plummets losing more than 20% in a day, hitting new dollar and euro lows

“Russian market suffered a lot last year, which led investors to lose interest, but now there are hopes that geopolitics are looking a bit better, so there are some investors trying to come back selectively and from very low levels,” Tchakarov told RT.

Western pressure and prospects

The downgrade on the Russian economy to non-investment grade by the two global rating agencies SP and Moody’s were largely anticipated, and the effect on the Russian market will be limited, analysts agree.

“There were expectations building up that Russia will be downgraded to junk. That’s how we can justify the effect that the Russian market has strengthened at the beginning of the year exactly the time when we have downgrades to junk,” Tchakarov said.

READ MORE: Russia’s downgrade by Moody’s ‘exorbitantly negative, politically motivated’ – finance minister

“Our personal view is that SP and Moody’s have an unnecessarily bearish view on the Russian economy that led them to thinking about downgrades. We don’t disagree that it will be a difficult year for the Russian economy – quite the opposite – we also expect a recession, but we do not think it will be as deep and as painful as it is anticipated by Moody’s. This is the reason why we still think that Russia deserves to be at Investment grade status,” Tchakarov said.

Sober-minded investors are skeptical about the data that the rating agencies release, and consider them to be ‘politicized’, Astapov wrote Russia Today in an e-mail.

The Western sanctions against Russia that have already hit both sides are in fact good for Russia, Astapov said.

“… we think, it [the sanctions – Ed.] is a good challenge for the Russian economy and a good reason to start the escalated economic reforms oriented at domestic resources,” he said.

Article source: http://rt.com/business/235659-micex-stocks-investments-forecasts/