Salient to Investors:

  • Ronan Carr at Morgan Stanley said they are tactically overweight Russian stocks – upped to Buy from Sell – and that the situation is not deteriorating and that worst case outcomes, like additional sanctions, now appear less likely.
  •  JPMorgan Chase said Russian stocks are likely to extend declines. Analyst Alex Kantarovich said buyers should wait for stabilization of oil and geopolitical de-risking. Analyst Anastasia Amoroso said the de-escalation of the Ukraine conflict may take 6 months to a year, and the sanctions would not be lifted until after that happens.
  • Kirill Yankovsky at Otkritie Capital said the absence of either Wall Street bank or individual consensuses indicates that no one understands what is going to happen – Russia’s economic future is tied up in politics, so a single political decision can spark a rally or tank.
  • Moody’s cut Russia’s credit rating to Baa2, the second-lowest investment grade.
  • The Micex is at 4.7 x estimated earnings, the cheapest in emerging markets.
  • Freeman & Co said that from 2002 through 2013, Morgan Stanley earned more investment banking fees in Russia than any other Western bank.
  • The median analyst expects Russia to grow 0.3% in 2014.
  • Ilya Kravets at Daniloff Capital said we have not passed the bottom yet, and investors are extremely cautious and well aware that it will take time for the Ukraine crisis to be solved and the sanctions to be removed.

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