As regular readers know, I have been heavily long Russian assets since December. I have outlined my thesis several times on this blog. Although I am up double digits for the quarter (despite a 35 percent cash position), I am not satisfied with my performance. Given that the consensus was so wrong, I should have made more of it. Back in December I wanted to put up to 30 percent of my net worth in Russian assets, which I could not do as the market improved rather quickly. Lesson: cost averaging is a dumb idea when assets are deeply undervalued (and I was a bit lazy as well)….
Now I read about Elvira Nabullina, the head of Russia’s Central Bank, saying:
There’s no reason to expect QE from us — our main instrument is the key rate,” Nabiullina said Tuesday. “I understand the sincere wish both to make loans more accessible and to spur economic growth. I understand these goals but believe that the recipes used by many countries won’t work and will have the opposite effect in the conditions of our Russian economy.
That’s correct Elvira: debt fuelled growth only distorts the economy and anyway mainly helps the crony capitalists, not the average Russian voter…
Although I think a technical correction could be in the cards for the RUB, with Central bank heads like this the Ruble could become the new DMark 🙂
PS. For the record: I DO think Elvira Nabullina handled the Rosneft refinancing badly, thereby causing the completely unnecessary RUB spike in December. I wanted to write a post on this, but lacked the time. Nonetheless, as CB-governor she is far better than Yellen or Draghi.