Keeping the Market in Focus
While I’m Out of Focus
The first crucial news is the interest rate, which is set at 18%. The next piece of news is that Eduard Gurinovich has filed an application to register the trademark hamster.com. This is a game where you need to tap a hamster and earn rewards. So far, nothing has been earned, but maybe in the future, you might receive something like cryptocurrency or something similar. The Central Bank calls it a scam, and likely, only the developers will benefit. Interestingly, Eduard is the founder and shareholder of Karmania, a company whose shares have dropped by about 30% since the IPO. One can make money from hamsters, but you can also make money from other ventures.
HeadHunter Report
HeadHunter has released a PDF report on the mood of employers and employees, and in short, things are not looking good. There is a shortage of workers, which leads to companies like Severstal investing in sports facilities in places like Cherepovets or other cities where their plants or businesses are located. We might expect this kind of expense to become common for large enterprises. For example, Nornickel spent around 90 billion rubles on developing Norilsk. While this makes sense from a human perspective, from a business viewpoint, it’s necessary for attracting new employees. Currently, workers are choosing employers who offer higher salaries, around 200,000 rubles a month. So, the next time you see a news report about increased expenses for regional development, view it positively. If there are no workers, there will be no one to earn dividends.
Lepim i Varim IPO
The company Lepim i Varim, a chain of dumpling restaurants, plans to go public. Let’s set aside any snobbery—this company might earn more than some businesses that went public last year. We are accustomed to seeing large companies like Gazprom, Lukoil, and Sberbank on the market, so any smaller company seems insignificant by comparison. However, if a company manages to earn revenue of 500 million or 1 billion rubles a year, it’s considered a large company by all standards. When these guys go public, they will undoubtedly face some mockery and sarcasm, including from us. I can already imagine headlines like, “What’s next, a showroom?”
TCS Holding’s Brokerage License Acquisition
TCS Holding has become a co-owner of another brokerage firm. We can only speculate about why they acquired another brokerage license. Perhaps it will be used for a separate brokerage or specific tasks, such as during an IPO. Most likely, it’s a purchase aimed at acquiring a portfolio held by this brokerage, possibly including frozen assets. There are dozens of brokerage licenses in Russia, and the market is expected to consolidate because small brokerages will struggle against larger players like TCS Holding, VTB, or Finam. If you thought this new brokerage would stand apart, it’s unlikely. It seems like another step in the consolidation of the brokerage market in Russia over the next couple of years.
Moscow Exchange Adding New Securities
The Moscow Exchange will add 15 new securities for off-exchange trades without listing, also known as OTC. The strategy announced by MOEX a bit over a year ago highlighted growth in off-exchange trades as a key area. The goal for the next three years is to have 300 securities on the OTC platform. After adding these 15, there will be 83 securities, representing about half of the market, as there are around 200 public companies in Russia. However, these new securities are mostly from companies that have been sitting with registrars for a long time, such as Novosibirsk Energosbyt or Saratovneftegaz. I expected the Moscow Exchange to introduce new primary placements, not just old paperwork. The first case of this is Space, which recently announced a large IPO with a goal of raising 1.5 billion rubles. This is a significant sum for such a company and represents a large portion of the annual crowd funding and venture capital in Russia. I hope for more such cases of new companies entering the market through OTC, growing, and eventually going public.
Upcoming Trip to Krasnoyarsk
In a week, I will fly to Krasnoyarsk again to check out new assets of the UGK company. We won’t be filming there, but perhaps we can record a short video with Murad. The reason for the trip is that PAO UGK has completed the construction of a gold extraction plant in Krasnoyarsk Krai, which will add 5.5 tons of gold per year. Over 40 billion rubles were spent on this project. I expect it to be impressive. I’ll quote UGK’s president, Konstantin Strukov: “The North-Yenisei district is the center of gold mining in the country. The launch of a modern ore-dressing plant is the result of the enormous effort of many professionals.”
Introduction of an IPO Passport
The public organization ARI has proposed introducing an IPO passport—a simple A4 document that would outline all important parameters of a deal. Currently, these details are spread across various regulations and documents that no one reads. This new document would provide a concise summary of the key details. This is a good initiative, and I hope the Central Bank supports it. It will make it easier to find information. However, if there is an IPO passport, there should also be a “marriage” page detailing the terms agreed upon with private investors.
Bank of St. Petersburg Buyback Program
The supervisory board of Bank of St. Petersburg has approved a share buyback program. The company will buy up to 20 million shares by the end of January 2025. The goal of the buyback is to increase capitalization, although it’s unclear how much further it can go.
Positive Technologies Report
Positive Technologies reported a loss of 4.4 billion rubles for the first half of the year. This is not alarming as the company’s business model tends to generate most revenue in the second half of the year. Despite this, they are falling short of their ambitious goals. The company projects shipments of 450 billion rubles for the year but achieved only five billion in the first half. The business environment is favorable, and I find Positive Technologies interesting because they conduct business with an American-style flair, investing significantly in marketing and high-profile events, which contrasts with the more modest approach of domestic companies.
SDEK and Cybersecurity Investments
SDEK recently faced operational issues, and Microsoft Windows also had some problems. This situation is prompting companies to invest more in cybersecurity. Positive Technologies stands out for its American-style approach, investing in high-profile events like the St. Petersburg International Economic Forum and spending over 1.5 billion rubles on such events. They also have a transparent bonus system, which some investors find off-putting. The company’s approach might be expensive, but it’s seen as a necessary investment.
Russian Oil Transit and New Buyers
In July, oil transit through Ukraine remained at previous levels. Transneft benefits from this situation. This is not a growth story but rather a case of stability, which is positive news. On the other hand, Indonesia has requested to buy several grades of Russian oil while adhering to the G7 price cap. However, President Putin has banned the sale of Russian oil to countries that implement such price caps. There’s a new buyer, but negotiations on price are crucial.
Deposit Portfolio Growth
As of the end of June, the volume of the deposit portfolio was nearly 50 trillion rubles, with a monthly income of about 3 trillion rubles. Around 1.5 trillion rubles were earned through deposit interest. The amount is expected to grow, driven by increased household savings and ongoing inflation. Citizens are advised to be cautious about investing heavily in deposits as inflation is unlikely to meet the 4% target. The Ministry of Finance has proposed long-term investment options like a children’s savings account with monthly contributions of 3,000 rubles.
Yandex Stock Launch
Yandex has launched its stock trading with a new, updated interface. The shares started trading at 10 rubles and quickly rose to 4,000 rubles each. This is a significant move, and I look forward to the day when Yandex will be just another company with straightforward shares, free of previous corporate events and uncertainties.
Finaim’s New Funds
The financial company Finaim plans to launch two new funds this fall, with a total volume of 6 billion rubles. These funds will select companies for IPO, allowing investors to buy a stake in a portfolio of carefully chosen firms. This approach could be beneficial, as it means professional funds will handle selections and take responsibility if things don’t go as planned.
Tinkoff Bank’s Pension Fund
Tinkoff Bank has announced the launch of its own non-state pension fund, Tinkoff Pension. The fund will be based on an all-weather portfolio and is expected to be well-designed and user-friendly. However, the fund may come with high commissions, so it’s worth considering carefully.
Conclusion
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