Moscow press review for July 7, 2015
MOSCOW. July 7 (Interfax) - The following is a digest of Moscow newspapers published on July 7. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Saudi Arabia's Public Investment Fund plans to invest $10 billion in Russia over four to five years under a partnership with the Russian Direct Investment Fund. Seven projects have already been selected and ten deals are expected to be made by the end of 2015. Areas of particular interest are infrastructure and agriculture, as well as retail, medicine and real estate (Vedomosti, p. 1; Kommersant, p. 2).
President Vladimir Putin was apparently the first foreign leader to speak to Greek Prime Minister Alexis Tsipras on Monday after the announcement of the results of Sunday's referendum. Russia will probably try to turn the debt crisis in Greece to its own political advantage, but Moscow does not have the economic clout to have a real impact on the situation in the European Union, analysts believe (Vedomosti, p. 2).
Annual inflation in Russia slowed to 15.3% in June, as monthly inflation fell to 0.2%, the lowest figure since August 2014, Rosstat reported. Food prices fell for the first time since July 2014, dropping by 0.4% compared to May, and price growth for nonfood goods slowed for the first time since last October. About 50% of Russians are spending less on food and nonfood goods, surveys show (Vedomosti, p. 5; Kommersant, p. 2).
Interview: Rustem Khamitov, President of Bashkortostan (Vedomosti, p. 8).
OIL & GAS
Gazprom is again changing its strategy for gas exports to Europe around Ukraine. Unable to secure a deal with Turkey, the Russian gas giant has suspended investment in the Southern Corridor, which was supposed to feed gas into the future Turkish Stream pipeline. As a result, the capacity of the latter will shrink by half to 32 bcm per year. The alternative will be the recently announced expansion of Nord Stream in the Baltic. Gazprom's changing plans are confounding its European partners (Kommersant, p. 7).
BANKING, FINANCE & INSURANCE
Special forces in St. Petersburg stormed the offices of City Invest Bank to secure access for the Investigative Committee, which is conducting a criminal investigation into abuse of office. Investigators wanted to obtain financial documents from the bank, but a search turned up several boxes containing $7 million belonging to Alexei Lysyakov, a State Duma deputy from A Just Russia (Kommersant, p. 1).
Uralsib Insurance Group saw its losses soar 360% to 3.9 billion rubles in 2014 and closed the year with negative capital. The insurer's liabilities exceeded assets by 396 million rubles at the end of 2014. Uralsib Financial Corporation co-owner Nikolai Tsvetkov, who controls Uralsib IG, recapitalized the insurer with shares in two other companies, and is prepared to provide future support (Vedomosti, p. 10).
RETAIL & CONSUMER MARKET
Advertising of fast food and junk food in Russia could be restricted like alcohol advertising, in other words essentially banned. State Duma members are proposing to legislatively restrict advertising of "harmful products" with high salt, sugar and saturated fat content in the media and public places. Advertisers spent 22 billion rubles on food and beverages ads on national television channels alone in 2014 (Kommersant, p. 1).
REAL ESTATE & CONSTRUCTION
The Federal Anti-Monopoly Service intends to review all of the tenders for toll road construction contracts held by Russian Highways (Avtodor) in the past three years for evidence of anti-competitive collusion. The regulator's scrutiny was drawn by tenders to build and maintain the Central Ring Road. The regulator's previous complaints have not had any impact on the fate of Avtodor projects (Vedomosti, p. 10).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
MTS, Russia's leading mobile services provider, is in talks with international telecom operators to purchase the rights to use their brands in Ukraine. The company is worried about potential pressure on its business from the Ukrainian authorities and hopes that rebranding will make MTS Ukraine's association with its Russian parent company less obvious. Potential partners include Virgin and Vodafone (Vedomosti, p. 1).
CTC Media has received an offer from UTV, a Russian TV broadcasting group controlled by Alisher Usmanov and Ivan Tavrin, to buy 75% of the company for $200 million in cash. UTV is valuing CTC at almost 95% less than what Yury Kovalchuk and his partners did in 2013 when they paid $1.1 billion for 25.2% of CTC, but the deal will enable CTC to preserve its business under the Russian law limiting foreign ownership of media companies (Vedomosti, p. 11; Kommersant, p. 10).
TRANSPORTATION & LOGISTICS
Russian flag carrier Aeroflot's market share has grown by 50% in the past three years. The Aeroflot group accounted for about 45% of passenger traffic in the first five months of 2015, up 7 percentage points from a year earlier. The market share of top rivals shrank only slightly. The aviation market is seeing a natural process of consolidation as regional carriers go out of business, BCS said in a report (Vedomosti, p. 11).
AUTOMOTIVE & ENGINEERING
A number of major Russian automobile dealers are facing problems with excess inventory, as producers are demanding they buy more vehicles than they can sell. Unsold stocks have reached about 100,000 vehicles. The situation is particularly dire with budget cars costing about 500,000 rubles. Dealers expect deferments and other concessions from manufacturers for storing vehicles, warning that otherwise they will be forced to sell at knock-down prices (Kommersant, p. 1).
Despite the Russian authorities' claims about the possibilities for exporting machinery to Iran, actual attempts to do so run into serious difficulties. Leading Russian farm machinery maker Rostselmash reached an agreement to sell combines to Iran, but problems arose with payment for the first one, as Iran is shut out of SWIFT and it is difficult to insure exports to the country. Even with the oil-for-goods program, trade with Iran will be minimal, analysts believe (Kommersant, p. 7).