Capital outflow from Russia totaled $17 billion says the Economic Development Ministry /   Farmers in Russia will lose about 6% of winter grain because of frost, says the Agriculture Ministry /   Nabucco project may be downsized /   Yandex teams up with Twitter for real-time search

Capital outflow from Russia totaled $17 billion says the Economic Development Ministry

Capital outflow from Russia reached $17 billion in January announced the Economic Development Ministry. The figure defies earlier estimates and represents a dramatic surge in the economy. At the end of 2011, the country’s top officials forecast that Russia’s capital outflow for the whole year would not exceed $20 billion.

The country’s policymakers as well as a number of economists, including Igor Prokhaev, vice president at Troika Dialogue, pointed out the current undervaluation of many Russian stocks and companies, since the upcoming presidential vote in March keeps investors wary. Shortly after the elections the situation should change and the economy should attract an influx of capital inflow.

Although, Prokhaev added that Russia is very dependent on oil and the price of commodities globally sets the pace for investors in the market.

In addition, the country may implement an expanded budget this year. For instance, Russia’s senior officials have pledged more defense expenditures and called for a stronger army. The country’s Prime Minister Putin outlined his plans to spend around $770 billion on military over the next decade.

Rising government expenditures adds additional pressure on the country’s budget, which does not help restore investor confidence in the Russian stock market.

Capital outflow from the country intensified in September last year and since then, the negative trend has persisted. Investors withdrew $85 billion from the Russian market in 2011.

And we’ve discussed the latest announcement by the Economic Development Ministry and the overall situation with the Russian economy and the stock market with PETER ZOPPA, head of research at Alfa-Bank in Moscow.

Yesterday morning there was a message that the Economic Ministry expected outflow of $17 billion and then later during the day the Central Bank stated in the afternoon that the actual outflow was $11 billion in January, which is in line with the fourth quarter dynamics and overall we expect that in February and in the first quarter the situation should improve.

But how big is the figure whether it’s $11 or $17 billion? What is your view on that?

In pre-election we have this outflow of 11, it is bad enough but not as bad, while 17 was just not consistent with the other figures we looked at. We saw that the ruble is strengthening, we saw thereservemovements in the foreign currency reserves and the 17 was not consistent with what we saw in other areas. The 11 is consistent, but it’s something which is in line with what we expected and as I said we expect the improvement and possibly after the election the situation could change.

However, at the end of 2011 the country’s top officials forecast that Russia’s capital outflow for the whole year would not exceed $20 billion. As we can see, the January figure accounts for a half of that amount. So, how serious is the situation and what shall we expect?

You cannot extrapolate this. The capital outflows can turn into capital inflows and then the situation changes so that you cannot take the first months and say, “let’s take tails and that is what the outcome will be”. We expect sometimes, as I said during the year a reversal of the capital outflow situation and then the figure for the whole year will look different.

Farmers in Russia will lose about 6% of winter grain because of frost, says the Agriculture Ministry

The officials continue to maintain, however, that “there’s no serious danger to winter crops” and spring sowing should compensate for the losses.

Rossiyskaya Gazeta daily quoted Agriculture Minister Yelena Skrynnik as saying that “this year’s harvest will be at least as big as in 2011, or 94 million metric tons.”

Prices of domestic Russian wheat have risen over the past week as exporters continue to make purchases in order to complete existing orders, Moscow-based think tank SovEcon said on Monday.

Last month, however, the Institute for Agricultural Market Studies said that the country could suffer a crop-damaging drought in the coming months.

Nabucco project may be downsized

Nabucco gas consortium is in talks over downsizing the original plan for the natural gas pipeline to Europe. The Wall Street Journal wrote that the key reason for the decision is the low amount of gas available at the moment in the region. Originally, the pipeline would stretch from the eastern Turkish border all the way to Austria. The new proposal runs the natural gas link between Bulgaria and Austria, and has only half the capacity of the original plan.

The news comes in times of an ongoing battle between different pipeline projects, and in the face of tightening budgets of proposed investors. Some experts, including Vladimir Socor,a senior fellow of the Jamestown Foundation, said that the downsizing of Nabucco comes as no surprise, as the project “lost momentum and, intimately, credibility in its existing form”. Socor argued that “the tipping point may be traced back to November- December of 2011, when several adverse developments converged”. The expert cited the deepening financial crisis in the euro zone, as well as the absence of a proactive management strategy by developers, who failed to come forth with a long-awaited correction to the cost of the pipeline.

In addition, British Petroleum and Azerbaijan’s State Oil Company proposed alternative transportation solutions to completely overhaul Nabucco.

Yandex teams up with Twitter for real-time search

Yandex, the Russian market leader in search engines, signed a deal with Twitter, which will allow Internet users to search the microblogging site in real-time. With the help of the Yandex’s ‘Blogs’ search engine, users will have access to the latest tweets on any subject.

Twitter first signed similar partnership deals, licensing a full feed of all public tweets, to Google and Microsoft’s Bing back in 2009. The arrangement between Google and Twitter ended last July, and as the Telegraph reported with reference to Twitter’s chief executive, negotiations on renewing the partnership have failed thus far.

The cost of the deal has not been disclosed, as well as the length of the contract between Yandex and Twitter. Yandex’s Blog Search Manager, Anton Pavlov, said the company is currently concentrating on a social networking search, and this partnership with Twitter reinforces its effort in this area. “People share news, exchange opinions and discuss all sorts of matters in real-time, all the time. This kind of information will help us enhance our search results,” he concluded.