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Business / Finance

"As long as oil is above $ 40, serious shocks to our financial system will not" interview 12.12.2018 at 21:04

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Independent analyst, former head of the analytical Department of Sberbank CIB on the future price growth and how that will affect the exchange rate in 2019.

— What are the threats to economic growth see you next year? And, in particular, how do you estimate the inflation factor? How big is the growth of prices can we expect?

Now the inflation rate is 3.8%, but the chances that we will overcome the target of the Central Bank before the end of the year, large enough. Think I'll go to 4-4,the 1%. It is possible that this acceleration will be an additional argument for the Central Bank to raise rates at the next meeting (on 14 December. — Approx. Banks.PY).

Is that long-term inflation risk is a moot point. I think the price spike will be short-lived, and the end of 2019, inflation will again fall below 4%. To say that inflation is a significant risk to the economy in the current environment, I would not. The significant acceleration of GDP should not wait, but somewhere in the range projected by the government 1.5% to 1.8% growth we will see.

— Can we call this growth organic? It is no secret that we in the decline of the whole industry. Take, for example, agriculture...

— Agriculture is very well risen after 2014, now it is showing a weaker trend. But I don't see a problem with the growth period follows a recession. In General, the recipe for economic growth based on consumption, not working. Because incomes in real terms are not growing for that year. And hope to change this trend in the near future is unlikely. However, the increase in labour productivity can lead to significant progress and more substantial economic growth. Investment companies in the modernization of production, new projects. But it is a slow path of evolution. Will not work to solve this problem for a year or two.

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— But many companies, by contrast, reduce capital expenditures...

— the Problem of low investment activity, in fact, exist. The situation remains heterogeneous. Nevertheless, examples of successful investments. If to speak not about the state and the private sector, the investment more effective. Especially if we talk about costs, which lead to increased production efficiency. Any company interested in maximising profit.

— How does this compare with the growing withdrawal of capital from Russia?

— increase the outflow of capital is the flip side of the growing surplus on current account. That is, if, for example, the exporter has received revenues in dollars or euros and left in the accounts currency, it is technically considered a capital outflow. This is a purely technical thing.

— that is, It appears, of the company to make a profit and leave money in the currency. It has something to do with the expectation of further weakening of the ruble? For example, due to foreign exchange intervention, which the Central Bank promises to renew in January?

— the Market is waiting for the resumption of the foreign exchange interventions of the Central Bank in the interests of the Treasury, and therefore any acute reaction, I do not expect. The shock will not be. Especially in the first and fourth quarters the current account remains strong due to seasonal factors. Exporters get more foreign exchange earnings with the onset of autumn and winter, so as to sell more oil and gas. This inflow of dollars and euros more than compensates for the purchase of the Central Bank. Another thing, if the Central Bank refuses to buy currency in January and will resume intervention, say, in February, the ruble it will be good news.

— That is not worth to bet on the growth of the dollar and the Euro?

— Against the ruble in the short term rather no than Yes. The behavior of the us currency depends on how the market will react to the fed rate hike and how it will be significant. But if you can choose between currencies, I would bet on the Euro. The European currency looks stronger and if now the exchange rate of the dollar is somewhere around 1.13—1.14 and by the middle of next year the Euro could rise to 1.16 to 1.18 to the dollar. Although much will depend on how things go Brexit.

of Course, from the point of view of saving of the investor is usually interested in the interest rate. The yield on dollar instruments is now growing. You must have noticed how changed Bank interest rates on dollar deposits. It makes more sense to keep savings in a basket of currencies.

— in Addition to the sanctions, oil prices and currency purchases of the Central Bank, what else will affect the ruble?

— the Last time the ruble has become less dependent on oil. But this time, because in the absence of the Central Bank in the market has accumulated a stock of foreign exchange liquidity. Next year will have to pay more attention to the news from Saudi Arabia, to assess the statements of OPEC. But as long as oil is above $ 40, serious shocks to our financial system will not.

— What is more dangerous for our stock market: sanctions or falling oil prices?

— Sanctions are already built into the price of stocks and bonds. Once against Russia adopted a new package, it should be a shock, but then the market is gradually recovering. The outflow of funds of non-residents more connected with the General trend of flight to dollar assets. If the aliens were 100% sure that sanctions will be imposed, and even in the hard version, we have in the BFL, the proportion was 25%, and zero. But if oil falls to $ 40, it will be a real test not only for financial markets but for the entire economy.

in Addition to savings in foreign currency and Bank deposits, more and more people choose government bonds. As a reliable tool, given the expected growth rates and outflows of foreigners?

— the reliability of this tool no doubt, but the market risks in it, of course, present. There is a risk of new sanctions, and it has not been canceled. There is a risk by the regulator, who can continue to raise rates, and this will shift the yield. But there is also the risk from the Finance Ministry, which, I remind you, plans next year to place the paper at 2.5 trillion rubles. But if you look at the success of the Department this year, so far they have raised around a trillion. Will there be a demand in the amount of two and a half times greater?

is Likely to occupy too expensive by the Ministry of Finance will not, and the plans of the borrowing will be adjusted. We have a budget surplus, and a significant portion of the proceeds from the placement of OFZ is to purchase foreign currency for the national welfare Fund. Part of Treasury bonds, we can easily opt-out by adjusting the fiscal rule. And to refinance the previous borrowing, the government just place the following year bonds on 800 million roubles. This can be done based only on the demand from Russian institutional investors.

To such bonds then to buy?

— While the market such uncertainty, it is reasonable to give preference to short bonds. Even paper with a maturity from one year to two years give a good premium over the key rate. Even if it will grow, then this premium will still remain. I don't think the rate increase will greatly affect their value. And given the fact that the liquidity situation next year will improve on the wave of demand bonds can grow in value.

— And what to do with long-term securities in the portfolios of many investors?

Some investors have already moved long-term bonds in the portfolio to maturity. A private investor is probably just not worth it to buy them. But if they are already in the portfolio, it is better to cut positions.

Interviewed albert KOSHKAROV,