By Andrei Skvarsky.
Russia’s oil and gas sector would be the wrong choice for an investor these days, according to Dieter Wermuth, chief economist at Wermuth Asset Management, a Russia-focused German fund manager.
With global economic growth slowing down significantly, a world oil price that has quintupled since 2003 makes no sense economically and mainly reflects the risk of a war between Israel and Iran, Wermuth argues in an article in Business New Europe Investor Weekly.
“I am still convinced that oil will cost something like $90 by the year-end,” he says.
Moreover, Russia’s oil and gas industry is going to be taxed more heavily, he warns.
So investors would be best-advised to keep clear of Russia’s oil and gas sector and go for telecoms, consumer goods, retailers and importers instead, Wermuth concludes.
“Conservatively managed banks such as Sberbank are also attractive, given that the country is extremely underbanked,” he says in his article, which is entitled “Oil price will not rise anymore in the near term” and published in the weekly’s April 2 issue.
In comments to EmergingMarkets.me, Wermuth said that “nose-diving” prices for natural gas would also “pull down oil prices at some point”.
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