#6596
#8
Long Term Russian Policies Questioned
LONDON, Dec. 9 /PRNewswire-FirstCall/ -- Third Millennium Russia Fund (OTC Bulletin Board: TMRFX), the second best performing US European fund year-to-date, today announced that John T. Connor, Jr., Portfolio Manager of the fund will speak in the 2002 Marcus Evans Conference on Corporate Debt & Equity Markets in London on December 11, 2002. Mr. Connor will question Russian Government policy and their future impact on financial markets.
"Right now Russia is definitely headed in the right direction, with its third straight year of meaningful economic growth," Mr. Connor declared. "Consumer disposable income is increasing smartly, to the point where we have set up a consumer sector in the Third Millennium Russia Fund, with six holdings, including two breweries, Baltika and Sun; a premium food producer Wimm-Bill-Dann; the Macy's of Russia, TsUM; the P&G of Russia, the Kalina; and a generic drug company, Akrikhin.
"But the staple crop of Russia remains oil, and I question whether Russia will be in a position to exploit its reserves long term. Responding to the request of Russian majors, all of which are held by the Third Millennium Fund, including Sibneft, Yukos, Lukoil, Surgutneftegas, Tatneft and Tymen Oil, the government has refused to offer both a reasonable production sharing agreement and tax policy. As a consequence foreign majors are generally taking their exploration billions elsewhere.
"Russia's reserves are being depleted faster than new reserves are being proven. Oil may be a bubble for Russia," he noted.
Mr. Connor added that World Bank study has found that countries with vast natural resources often remain poor because of the inability to attract the necessary capital for exploitation. "And here Russia is literally driving away capital."
"If the oil bubble bursts on Russia, the residue will be its still anemic financial sector," Mr. Connor predicted.
In addition, Third Millennium Russia Fund holds only one financial company, Sberbank, which has performed well, adding:
"Due to the protectionism of Russia's bankers and insurers, government policy is very unfavorable to interested foreign entrants. Since Russia does not have the financial capacity to underwrite all the liability risk that cries out for coverage, Russia is highly unlikely to create a viable financial sector on its own and should look to Poland and the other formerly communist countries on how they are doing it."
Mr. Connor noted that the protectionist government policy in the financial sector would be the single biggest obstacle to Russia joining the World Trade Organization (WTO), which President Vladimir Putin has stated is Russia's goal.
"Government policy in this area is weak, inconsistent and troublesome for long term investors," Mr. Connor concluded.
The 2002 annual international conference is being held at the Kingsway Hall Hotel, Great Queen Street.
Third Millennium Russia Fund, 11th best performing fund in the country, is an open-end mutual fund focusing on the oil sector, utilities, telecomm and a broad selection of other audited, market leading public companies. John Connor, the fund's manager has been involved in Russia for more than 25 years running an insurance company in Russia, acting as deputy director of the U.S. Commerce Department's Bureau of East-West Trade, and establishing and heading the Moscow office of the US-USSR Trade and Economic Council. Third Millennium Russia Fund is available through Waterhouse and Charles Schwab & Company. For more information on Third Millennium Russia Fund, visit Third Millennium's website at http://www.tmrfx.com, or call 1-800-527-9525.
SOURCE Third Millennium Russia Fund
Back to the Top Next Article
- Back to the Top -