Deutsche Bank and Troika Dialog claim that the odds that Khodorkovsky will be released have risen to 50 percent. The reasoning of those betting on a release is almost completely economic:
Releasing Khodorkovsky would spur a rally in Russian stocks of 5 percent to 10 percent, Deutsche Bank said in the note. Lissovolik declined to comment further when Bloomberg reached him by phone in Moscow.
“It’s a 50-50 call right now,” said Chris Weafer, chief strategist at Troika Dialog, the investment banking unit of state-run lender OAO Sberbank (SBER).
Micex Index Rises
Chaika’s review “should be completed this weekend and then any cases found to be unsound will go to a presidential commission for final review and recommendation,” Weafer said by phone. “By that time, Putin will be in the Kremlin.”
The Micex Index (INDEXCF) of 30 Russian stocks advanced 1.6 percent to close at 1,565.12 in Moscow, its biggest one-day gain in more than two weeks.
The Russian gauge surged as much as 1.6 percent in August 2008 on a report, later retracted, that Khodorkovsky had been given parole. Medvedev steps aside in May to allow Putin to reclaim the Kremlin spot he occupied from 2000 to 2008.
The new government may want to “make a smash,” by releasing Khodorkovsky, according to Mattias Westman, founder of London-based Prosperity Capital Management, the largest Russia- focused fund manager with about $5 billion in assets.
“It would have a positive effect and would make people reconsider Russia,” Westman said by phone from London. A 5 percent to 10 percent gain for the Micex is not “a bad estimate,” he said.
I think this is nuts. It is best interpreted like Freud interpreted dreams: wish fulfillment by those who want to encourage a rise in stock prices-and a rise in stock trading-in Russia.
It completely discounts the politics, and Khodorkovsky’s imprisonment is all about politics. 110 percent. In the aftermath of the most unsettling moment in recent Russian political history, do you think Putin would risk releasing Khordorkovsky? Set aside his visceral hatred of the man. Just look at the objective reality. Wide swathes of the Russian public are dissatisfied, and sick of Putin. But the opposition has failed primarily because it lacked leadership. Khodorkovsky could provide that leadership. And he has the money. And he has reason to go after Putin personally. Putin has survived in large part by keeping any potential opposition divided and leaderless. Releasing Khodorkovsky in these fraught and unsettled times? The upside for Putin is almost zero-the downside is big. No, Khodorkovsky’s success would not be assured, but the odds of a political crisis are far larger with him free, than with him behind bars. You really think Putin is going to take that risk?
And know that once released, Khodorkovsky would make every effort to recover what he believes was stolen from him and other Yukos shareholders. That would strike right at the heart of the siloviki elite and their ill-gotten gains.
So I would definitely short Khodorkovsky’s release at 50-50 odds. At 10-90 odds even. I put the odds at virtually zero.
So why the rumor? Great opportunity to sell into the rally brought on by suckers buying based on it. Another opportunity to part fools and their money. So I think that this is being floated by people in the Russian government who want to fleece gullible Western dreamers. And given that business and finance ethics in Russia are epitomized by people like Shuvalov, this is the most likely explanation.
Are we supposed to take investment advice from Deutsche and Troika? I pass.