Russia:  Spring  2013  Financial  Report  

 

 

 

 

   

M e r r i l l   L y n c h  

9 5 9 5   S i x   P i n e s   D r i v e ,   S u i t e  8 3 8 0 ,   T h e   W o o d l a n d s ,   T X ,  

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Samuel  Carmody  Per  request  of  Merrill  Lynch  client,  Gary  Brown,  here  is  a  report  for  the  potential  investment  in  Russia.  This  report  contains  Economic,  demographic,  Ethnic,  Religious,  Currency  stats,  and  more.  

 

1    

Recommendation    

Mr.  Brown,  

 

After  analyzing  data,  I  cannot  recommend  an  investment  in  Russia.  Russia’s  growth  was  hot  after  the  collapse  of  the  Soviet  Union  in  the  early  1990’s  and  elevated  Russia  to  second  world  status.  The  economy  had  a  slump  in  2009  and  has  not  recovered  fully  since.  My  data  analysis  has  shown  that  corruption,  shrinking  workforce,  and  lack  of  infrastructure  investment  will  be  problems  for  the  foreseeable  future.  My  tracking  of  the  stock  fund  in  that  region  (TREMX)  has  shown  a  three  percent  loss  in  the  last  four  months.  The  election  of  Vladimir  Putin  in  2012  did  not  give  the  economy  the  boost  it  needed.  The  lack  of  infrastructure  investment  has  kept  Russia  in  the  fourth  stage  of  the  Rostow  Model.  Therefore,  as  said  before,  I  cannot  recommend  an  investment  in  Russia.  

 

Sincerely,    

 

 

 

 

Samuel  A.  Carmody  

Merrill  Lynch  Financial  Advisor    

         

 

 

 

 

 

2    

Economy  

GDP  (PPP):  $2.504  Trillion    

GDP  Real  Growth  Rate:  3.4%  

GDP  Per  Capita:  $17,700  

GDP-­‐Composition  by  Sector:    

  Agriculture:  3.9%  

  Industry:  36%  

  Services:  60.1%  

Unemployment  Rate:  5.7%  

Public  Debt  of  GDP:  12.2%    

Industries:  

  Mining  

  Energy  

  Defense  

  Agriculture  

  Shipbuilding  

  Electronics  

Labor  Force-­‐by  Occupation:  

Agriculture:  7.9%  

  Industry:  27.4%  

  Services:  64.7%  

3    

Netherlands,  12.2%  

China,  6.4%  

Italy,  5.6%  

Germany,  4.6%  

Poland,  4.2%  

Export  Partners  

China,  15.5%  

Germay,  10%  

Ukraine,  6.6%  

Italy,  4.3%  

Import  Parnters  

Military  Expenditures  of  GDP:  3.9%  

Exports  and  Imports    

Exports:  $530.7  Billion  

Export  Commodities:  

  Petroleum    

  Petroleum  Products  

  Natural  Gas  

  Metals  

  Wood  

 

 

Imports:  $335.4  Billion  

Import  Commodities:  

  Machinery  and  Vehicles  

  Pharmaceuticals  

  Refined  Metals  (Steel)  

  Meats  

  Fruits  and  Nuts  

 

 

 

 

4    

Demographics  

Population:  142,500,482  

Population  Growth  Rate:  -­‐0.01%  

Net  Migration  Rate:  0.29  migrants/1,000  population  

Life  Expectancy:  66.46  years  

  Male:  60.11  years  

  Female:  73.18  years  

Total  Fertility  Rate:  1.6  children  per  woman  

Infant  Mortality  Rate:  7.3  deaths/  1,000  live  births  

   

Median  Age:  38.8  years  

  Male:  35.6  years  

  Female:  42.1  years  

 

11119318  

8045363  

33417073  

11009712  

12955556  

11740877  

8401971  

31945797  

8177300  

5687515  

0   10000000   20000000   30000000   40000000  

0-­‐14  Years  

15-­‐24  Years  

25-­‐54  Years  

55-­‐64  Years  

65  and  Older  

Age  Structure  

Male  

Female  

11.5%  

16%  

45.9%  

13.5%  

13.1%  

5    

Ethnic  Groups:    

  Russian:  79.8%  

  Tatar:  3.8%  

  Ukrainian:  2%  

  Bashkir:  1.2%  

  Chuvash:  1.1%  

  Other/Unknown:  12%  

Religions:    

  Russian  Orthodox:  15-­‐20%  

  Muslim:  10-­‐15%  

  Other  Christian:  2%  

Language:    

  Russian  (Main  Language)  

    Many  Minority  Languages  

Literacy  Rate:  99.6%  

Government  

Government  Type:  Federation  

Currency:  Russian  Ruble  

 

 

 

6    

Geography  

Land  Use:    

  Arable  Land:  7.17%  

  Permanent  Crops:  0.11%  

  Other:  92.72%  

Terrain:    

  Low  Hills  and  Plains  west  of  the  Ural  Mountains  

  Vast  Forest  and  Tundra  in  Siberia  

  Uplands  and  Mountains  on  the  Southern  Borders  

Natural  Resources:    

  Oil  

  Natural  Gas  

  Coal  

  Minerals  

  Timber  

Climate:  Humid  Continental  in  European  Russia,  Subarctic  to  Tundra  in  Siberia,  

South  has  Warm  Summers  and  Cool  Winters,  North  has  Cool  Summers  and  Frigid  

Winters        

 

7    

Russian  Stock  Fund  (TREMX)  

 

 

date   price   Investment    12-­‐Feb   20.29   100495.36  13-­‐Feb   20.43   101188.77  14-­‐Feb   20.21   100099.12  15-­‐Feb   20.14   99752.41  19-­‐Feb   20.26   100346.77  20-­‐Feb   20.13   99702.88  21-­‐Feb   19.72   97672.17  22-­‐Feb   19.66   97375.00  25-­‐Feb   19.59   97028.29  26-­‐Feb   19.65   97325.47  27-­‐Feb   19.76   97870.29  28-­‐Feb   19.71   97622.64  1-­‐Mar   19.61   97127.35  4-­‐Mar   19.47   96433.94  5-­‐Mar   19.81   98117.94  6-­‐Mar   19.88   98464.65  7-­‐Mar   19.84   98266.53  8-­‐Mar   20.03   99207.59  

11-­‐Mar   19.93   98712.29  12-­‐Mar   19.86   98365.59  13-­‐Mar   19.74   97771.23  14-­‐Mar   19.87   98415.12  15-­‐Mar   20.02   99158.06  18-­‐Mar   19.62   97176.88  19-­‐Mar   19.38   95988.17  20-­‐Mar   19.52   96681.58  21-­‐Mar   19.41   96136.76  22-­‐Mar   19.38   95988.17  25-­‐Mar   19.24   95294.76  26-­‐Mar   19.34   95790.05  27-­‐Mar   19.25   95344.29  28-­‐Mar   19.54   96780.64  1-­‐Apr   19.6   97077.82  2-­‐Apr   19.56   96879.70  3-­‐Apr   19.3   95591.94  4-­‐Apr   19.17   94948.05  5-­‐Apr   19.04   94304.17  8-­‐Apr   19.4   96087.23  9-­‐Apr   19.5   96582.53  

10-­‐Apr   19.65   97325.47  11-­‐Apr   19.72   97672.17  12-­‐Apr   19.62   97176.88  

price  on  2/11/13   shares  20.19   4952.95  

Initial  Investment   100000  Final  Investment   97176.9  Net  Gain/Loss   -­‐2823.12  

10  Largest  Holdings    1.BIM  Birlesik  Magazalar    2.Gazprom    3.Globaltrans  Investment    4.Lukoil    5.MHP    6.Magnit    7.NovaTek  OAO    8.Sberbank  of  Russia    9.Turkiye  Garanti  Bankasi    10.Turkiye  Halk  Bankasi    

   Sector  Diversification   %  Financials   33.2  Consumer  Staples   20.5  Energy   18.1  Industirals  &  Business  Services   7.8  Materials   7.5  Information  Technology   4.5  Health  Care   4  Telecommunication  Services   3.2  Consumer  Discretionary   0.5  

   Regional  Exposure    Europe  (99.4%)    

   Country  Exposure   %  Russia   64.7  Turkey   21.4  Ukraine   4.4  Kazakhstan   2.6  Poland   2.1  Georgia   2.1  Portugal   2