Bought a 2% position in Nornickel (MOEX:GMKN). Taking advantage of the low prices from the Ukraine situation. Safer to buy on MOEX directly, than to buy the US-listed ADRs.
Nornickel is a low cost producer of:
- Palladium. Used as a catalytic converter for petrol engines. Its used in greater amounts for hybrids, so may have rising demand from this. Not used in EVs.
- Nickel. Used to strengthen steel for construction. May have increasing demand for lithium-ion batteries.
- Copper. Used to transmit electricity. May have increasing demand if China doesn't slow its copper usage.
Its got a trailing 9-month yield of 10%, but it all depends on metal prices.
I now have 11% exposure to Russia (includes Kazakstan), thats enough.
Ukraine
Now I join all the instant experts on Ukraine.
The facts:
- Russia can easily take Ukraine.
- But it may be too costly for them to hold it. Ukraine has 45m people.
- Any invasion must start by March. Before Spring turns the ice to mud. Then the invasion has to wait til Summer.
- Sanctions don't bother Russia, they have high reserves.
I'd put the odds at:
- 70% chance that Putin gets some meaningful concessions and pulls back.
- 30% chance of war. The Russians need to take Ukraine for defensive purposes (from their point-of-view), and this is the last chance they get.
The repercussions of a war:
- Gazprom goes to zero. Germany looks elsewhere for energy.
- Apart from (piped) natural gas, I believe sanctions won't work against a commodities exporter. Commodities are fungible, and in short supply at the moment. This is like China trying to stop buying Australian coal.
- The only way I can see sanctions working is if the US plays hardball and stops trade with any country that trades with Russia. Thats is: an excuse to them to de-globalise.
- Interactive brokers is a US company and may stop access to MOEX.
- Taiwan invasion becomes more likely?
Some of the better commentary on the Ukraine situation:
No comments:
Post a Comment