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New sanction threats, same shrugs from Russia’s investors By Reuters

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© Reuters. A board showing currency exchange rates of the euro against the Russian rouble is on display in Moscow

By Marc Jones

LONDON (Reuters) – The West’s push to impose sanctions on Russia over an alleged nerve agent attack on President Vladimir Putin’s main political opponent is getting a familiar shrug of the shoulders from international investors, who view Moscow’s finances as just too strong to be cracked.

November’s U.S. election could be a game changer but, for now, money managers are drawing on experiences of the 2014 Ukraine crisis and 2018’s Mueller report and Skripal spy poisonings, and not rushing to react to the latest tensions.

The consensus has long been that, as long as Washington or Europe don’t impose the ultimate sanction and make it illegal to own Russian sovereign debt, new threats won’t dent the appeal of decent 2% ‘real’ interest rates and one of strongest public balance sheets in the world.

Underpinned by its huge reserves of oil and gas, Russia’s debt-to-GDP ratio is expected to be just 20% this year, less than a fifth of that of the United States, Britain or France and under a third of China’s.

Along with well over half a trillion dollars worth of reserves, a competent central bank and conservative fiscal policy, Mirabaud’s head of emerging market debt, Daniel Moreno, says it makes Russia one of the strongest markets he looks at, and bulletproof to all but the worst-case sanctions.

“What we know is that over the past six years since the events in the Ukraine happened, the U.S. and EU have been continually applying sanctions,” Moreno said.

“The question is, are these sanctions having any desirable effect (for the West)? I think the answer is definitively ‘no’.”

Graphic – , routs and reserves: https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqygyjpx/Pasted%20image%201599518333986.png

It’s not that sanctions – or the threat of sanctions – haven’t triggered negative reactions. They have.

For BlueBay Asset Management’s Tim Ash, a growing list of situations where Moscow is under scrutiny has driven a mini- sell off in Russian assets.

“It is trading on the general Russia-Western relationship,” Ash said. “Alexei Navalny, U.S. elections, Nord Stream, Belarus, Syria, Georgia. There is a lot going on.”

Talk of the EU abandoning the Nord Stream 2 gas pipeline due to the Navalny case, tensions over Belarus’ disputed election, combined with a fresh drop in oil prices and looming U.S. elections have knocked 5%-12% off Russia’s rouble (), government bond and equity markets () () over the last few weeks.

It was similar in both 2014 and 2018 when international investors also cut their ‘OFZ’ government bond holdings.

It’s just that for investors with a medium or longer-term view, these kind of moves have always reversed — Russian bonds earned more than 20% last year and equities 40% — and even the reactions to new threats seem to have become smaller recently.

JP Morgan data shows for example that its clients were more invested in Russian bonds — ‘overweight’ in fund manager speak — coming into the current events than at any time in at least the last 6 years.

Graphic – Rouble hit by negative sentiment: https://fingfx.thomsonreuters.com/gfx/mkt/jznpnxgqbpl/Pasted%20image%201599646468394.png

Graphic – Investors sell out of Russia in times of stress: https://fingfx.thomsonreuters.com/gfx/mkt/oakpeoynzpr/Pasted%20image%201599225162541.png

REALPOLITIK VS REAL INTEREST RATES

High ‘real’ interest rates — rates minus inflation — along with Russia’s other strong fundamentals have helped lure back investors.

Foreigners owned a record 35% of the rouble-denominated OFZ bond market before COVID-19 and collapsing oil prices caused an exodus from emerging markets this year.

The country’s share in JPMorgan’s GBI-EM index, the main global benchmark for emerging market local currency bonds, has also grown to 8.3% from nearer 7% a couple of years ago and just 1.5% in 2007.

It is still off the 10% index-maximum hit during the 2012-14 oil boom, though, and elsewhere it has lost ground.

Having had its ability to issue new dollar-denominated debt limited by previous U.S. sanctions, Russia now comprises just 3.4% of JPM’s “hard currency” EMBIG Diversified index compared to 9.0% in 2007.

The rise of big tech at the expense of oil firms has also seen it drop to 4.4% from 14% on the corporate debt equivalent, and to just 3.3% on MSCI’s emerging equity index, a benchmark for almost $2 trillion in cash.

Graphic – Russia’s weighting in global bond indexes: https://fingfx.thomsonreuters.com/gfx/editorcharts/xlbvgldaxpq/eikon.png

Rating agency Fitch thinks the risk of further western sanctions on Russia “remains high”, especially with U.S. election race hotting up. But it doesn’t expect really crippling steps such as complete ban on owning Russian debt or its banks being cut off from the SWIFT global payment system.

“We have seen that the past sanctions sell-offs were always actually a good opportunity to get in,” said Aberdeen Standard Investment portfolio manager Viktor Szabo. “Russian assets came back with a vengeance.”

Graphic – FX reserve adequacy: https://fingfx.thomsonreuters.com/gfx/mkt/dgkvlllmjvb/FX%20reserves%20adequacy%20metrics.PNG





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Economy

Traders Brace For Flood Of Market-Moving Events In The Week Ahead By Investing.com

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By Jesse Cohen

Investing.com – Stocks on Wall Street ended mixed on Friday, with the falling slightly to end a disappointing week.

The Dow slumped 28 points, or 0.1%, to 28,335. The rose 0.3% to 3,465, while the closed 0.4% higher at 11,548.

For the week, the Dow and S&P 500 lost 0.9% and 0.5%, respectively, to snap a three-week winning streak. The Nasdaq meanwhile dropped 1.1%, posting its first weekly loss in five weeks.

Between uncertainty surrounding ongoing stimulus talks in Washington, political developments ahead of the looming November 3 election, a heavy batch of high-profile earnings reports, as well as key economic data, next week is expected to be a busy one on Wall Street.

Google-parent Alphabet (NASDAQ:) is scheduled to release its quarterly results on Monday, followed by Microsoft (NASDAQ:) on Tuesday. Apple (NASDAQ:), Amazon (NASDAQ:), and Facebook (NASDAQ:) are then all due to report their respective results on Thursday.

The coming week also marks an important one on the economic calendar, with the big day coming on Thursday, when the U.S. releases the first look at third-quarter gross domestic product.

After the second quarter’s shocking 31.4% decline following coronavirus shutdowns, the economy is expected have bounced back, with growth of expected in the third quarter.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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FIMI sells 33% of medical equipment co Simplivia

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Private equity firm FIMI Opportunity Funds, headed by Ishay Davidi, has sold 33% of the shares in healthcare company Simplivia to The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) and Leumi Partners, in equal shares, for $47 million, at a company valuation of $140 million.

FIMI bought the business from Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and set up Simplivia in 2019 at an investment of $47.5 million. Including the current deal, FIMI has made a return of $67 million on its investment. It will continue to hold 65% of the company.




Simplivia produces equipment that protects hospital medical staff from exposure to dangerous materials while treating oncology patients. Its production facility is in Kiryat Shemona and its head office is in Hod Hasharon. It employs about 200 people.

Published by Globes, Israel business news – en.globes.co.il – on October 22, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020




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Israeli blockchain accelerator Collider Labs raises $1m

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In the past two years the blockchain and cryptocurrency industry has shrunk considerably, and many companies have closed, but in the past couple of months there has been something of a revival in the formation of startups and in new investment in this field. This trend finds expression in Israel in the formation of a new accelerator, Collider Labs, launched this week by the founders of venture capital firm Collider Ventures.




An initial $1 million has been invested in setting up Collider Labs. The money was raised from dozens of investors, chief among them the three founding partners Ofer Rotem, Adam Benayoun, and Avishay Ovadia.

Collider says that the $1 million raised for the new accelerator is earmarked for investment in early-stage companies in pre-seed investment in amounts between $25,000 and $75,000 for each company. A first startup has already joined the accelerator – a company set up by Israeli entrepreneurs and operating from London. Collider has not so far released further details.

Ovadia, who is founding venture partner at Collider, is manager of the new accelerator. “Our model is different from that of most accelerators,” he told “Globes”. Generally, when an entrepreneur is accepted to an accelerator, he finds that he is expected to work according to a rigid work plan and a timetable dictated from above. With us, it’s quite different: we tailor a personal program for each entrepreneur, in accordance with the stage he is at, and don’t hesitate to change the program as necessary. The aim is to become genuine partners of the most talented entrepreneurs in the market, in the hope of continuing to accompany them as the ‘home investor’ even after they spread their wings and become sell-established blockchain companies.”

Published by Globes, Israel business news – en.globes.co.il – on October 22, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020




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