In three days, Rusal shares lost about 17%. The market takes the threat of re-inclusion of Rusal in the sanctions lists quite seriously after an article in Bloomberg that Oleg Deripaska retained influence on the company’s management. The statements of Deripaska himself and his lawyers that this information does not correspond to reality have not yet reassured investors.
How serious is the threat of new sanctions from the US Treasury? Is it worth buying the heavily depreciated Rusal shares or is it very risky? Alexey Kalachev, an analyst at the FINAM Group, answered the question of Fortrader magazine.
Rusal shares look attractive
– Shares “Rusal” look attractive at current prices, after falling to the level of technical support in the region of 34 rubles. a piece. Prior to that, during November, they grew by a third, from 30 rubles. up to 40 rubles, following the price of aluminum, which has significantly strengthened along with the prices of other industrial metals and reached a level above $ 2 thousand per ton. At this level, Rusal’s own operating activities are profitable, while the proceeds from owning a 27.82% stake in Norilsk Nickel make it possible to service the company’s large debt.
I believe that the value of RUSAL shares may return to growth after the market “digests” the negative from the Bloomberg publication. However, there is a wise rule – do not grab the falling knives, and it would be wiser to wait until the fall is over.
If it is indeed confirmed that Oleg Deripaska and Rusal violated the conditions that made the company excluded from the US Treasury’s sanctions list, formal grounds appear for the return of the company to it, and this worries investors. However, I believe that it will not come to this. Additional control requirements may apply. Perhaps new restrictions will be imposed on Deripaska. But the company itself will not be subjected to a new lockdown. If this is possible, then not for this violation, if it really happened, of course, but within the framework of a general exacerbation of the confrontation between the United States and the Russian Federation across the entire range of relations.
Previous sanctions against Rusal
In fact, last time the sanctions were not aimed at Russian aluminum, but at one of the businessmen close to the Kremlin, among whose assets was Rusal. As it later became clear, no one in the US Treasury intended to jeopardize the entire aluminum industry of the Russian Federation. And Rusal, as it apparently came as a surprise to them, is the entire aluminum industry of the Russian Federation. And even more so, no one intended to create problems for the global aluminum market and to clear a share for the aluminum industry of the PRC, eliminating one of the largest players from the market. That is why negotiations and the search for a formula for agreements began so quickly to remove restrictions from Rusal without sacrificing “punishment” for Oleg Deripaska.
This time, I think, no one wants to step on this rake a second time. Except, of course, for the case that relations with the Russian Federation have deteriorated so much that other considerations no longer work. The likelihood of this worst-case scenario is low. However, it is not equal to zero and, unfortunately, tends to grow. So I would still prefer wait until the danger is over… However, investors who are more tolerant of increased risk can already start buying at these attractive levels.