28 October 2003 01:47
Yukos THE LEX COLUMN:
Damage limitation does not appear to be high on Vladimir Putin's agenda.
Rather than stress that Mikhail Khodorkovsky's arrest is an issue
specifically to do with the Yukos chairman, Russia's president has
refused to meet representatives of big business to discuss the situation.
With no guidance, it is hard to know what will happen next, or to be
confident that the long-running stand-off between Mr Putin and Mr
Khodorkovsky will be resolved rationally. There have been other reminders
that Russian laws can be used to suit political purposes. July's jailing
of Platon Lebedev, a close Khodorkovsky associate, pushed shares down
temporarily. Then, hopes that a deal would be struck between ExxonMobil and
Yukos, Russia's largest company, overrode political risks. In fact, the
expectation of continued strong direct investment flows is behind much of
this year's 65 per cent rise in Russian shares.
Will the Khodorkovsky arrest effect also fizzle out? The main reason why US
companies want to buy Yukos remains. With 5.7 per cent of the world's
proven oil reserves last year, getting a stake in that market remains a
strategic priority, even with political risks attached. But market
expectations of a deal before December's parliamentary elections were
always optimistic. As long as Mr Khodorkovsky is in jail - he is Yukos's
biggest shareholder as well as its chairman - there is no one to do a deal
with. Talks may be pushed back by many months. With the oil and gas sector
accounting for about 75 per cent of the Russian stock market, investors
should not assume that the bounce back from yesterday's fall will be
quick. Mr Khodorkovsky's arrest may well be the trigger for a correction
which, arguably, is long overdue.
[FTI [The Financial Times]] |
RUSSIA IN FACTS
