Moscow press review for April 28, 2014
MOSCOW. April 28 (Interfax) - The following is a digest of Moscow newspapers published on April 28. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Statistics for the first quarter show that the political crisis in Ukraine has deepened the industrial collapse in the country, and now due to the drop in trade with Russia the epicentre of the hit to the economy are the Donetsk and Dnipropetrovsk regions. Measures proposed by the interim government will not help the Southeast - the devaluation of the hryvnia and freer exports to the EU will only ease the impact of the economic crisis, which is expected to peak in May-June (Kommersant, p. 1).
The Russian economy has suffered a double blow. Standard & Poor's downgraded Russia's sovereign credit rating to where it was ten years ago, citing the crisis in Ukraine. Meanwhile, the Central Bank unexpectedly hiked its key interest rate by 50 basis points to 7.5% (Vedomosti, p. 4).
Foreign investors still believe it is unlikely that Russia will be hit with economic sanctions. Businesses working in Russia are currently more concerned about the ramping up of measures to protect the national economy, including tighter regulations on the border, localization of production and licensing of imported goods, a meeting First Deputy Prime Minister Igor Shuvalov held with foreign investors over the weekend showed (Kommersant, p. 2).
Russia's Far East Development Ministry is proposing the government finance construction of infrastructure for investors. Businesses are prepared to develop the Far East on such terms. There will be 17 rubles of private investment for every ruble the government invests, the ministry reckons (Vedomosti, p. 5).
OIL & GAS
Independent Petroleum Company (IPC), founded by former Rosneft head Eduard Khudainatov, has formed a joint venture with the Bazhayev family's Alliance Oil. IPC will get a 40% stake in the venture, which could be worth up to $6 billion, and Khudainatov will be CEO. Analysts suspect the venture will ultimately be acquired by the state oil major (Kommersant, p. 1; Vedomosti, p. 1).
Europe is prepared to invest almost 6 billion euros in the construction of pipelines to buy gas from Azerbaijan, Turkmenistan and Iran. The EU plans to extend the route of gas shipments along the Southern gas corridor from Azerbaijan from its terminus in southern Italy deep into the continent (Vedomosti, p. 11).
The idea of consolidating European policy on gas purchases is gaining traction. Germany's chancellor has supported a Polish proposal to from a European energy union that would coordinate gas imports and negotiations on new long-term contracts with Russia's Gazprom. But market sources still believe the project is unrealistic and discussions about it are political (Kommersant, p. 12).
METALS & MINING
The Russian Direct Investment Fund plans to find Asian co-investors for three greenfield mining projects in Russia by the fall - Metalloinvest's Udokan, Millhouse's Baimskoye and Polyus Gold's Natalka. The projects, aimed at export markets in the Asia-Pacific region, need strategic and financial partners, and the fund will essentially act as a guarantor of investment by the state (Kommersant, p. 10).
BANKING, FINANCE & INSURANCE
After deciding to create a national payment system and demanding financial guarantees for uninterrupted operation from Visa and MasterCard, Russia's Finance Ministry is now considering how to exercise influence over the SWIFT international bank telecommunication system. The relevant bill might emerge in May, but analysts reckon that no more real leverage will be gained over foreign companies by rewriting laws (Kommersant, p. 1).
Russia's Federal Anti-Monopoly Service is proposing a radical reform of the troubled mandatory automobile liability insurance sector by creating an industry association that would collect money for policies and pay out claims. Insurance companies would only be left to play the role of agents (Vedomosti, p. 10).
Most companies that manage the retirement savings of Russians suffered losses on their portfolios in the first quarter, showing the worst first-quarter results since the financial crisis. The market slide in March not only led to negative revaluation of risky equities, but also conservative bonds and fund managers will only be able to earn on coupon income until the Ukrainian crisis abates, market players reckon (Kommersant, p. 9).
Leading Ukrainian lender Privatbank, which was the first to stop serving clients in Crimea after the peninsula was joined with Russia, unexpectedly asked President Vladimir Putin to allow it to meet its obligations by handing off its Crimean business to a Russian bank. But a court has already put Privatbank's Crimean division under the management of a fund created by Russia's Deposit Insurance Agency (Kommersant, p. 10).
RETAIL & CONSUMER MARKET
Interview: Daniela Riccardi, CEO of Baccarat (Vedomosti, p. 8).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Rostelecom, Russia's national telecommunications provider, still does not have a board chairman. The Federal Property Agency and Communications Ministry have proposed Vadim Semyonov, but his candidacy has not been approved. The Kremlin reportedly wants Gazprom Media Holding CEO Mikhail Lesin to be chairman instead (Vedomosti, p. 10).