Yukos: Worse Still To Come?

June 2004 | Market Strategy

All news seems to be bad news for Russian oil giant Yukos at the moment. No matter whether the company tries to fight the US$3.4bn tax bill through hiring a US public relations firm, or moots the possibility of issuing new shares to meet the tax demand, the market reacts negatively. Attention remains focussed on the annus horribilis continuing unabated, and the potential exists for the firm's shares - already trading as low as 6.0%, 14.3% down on the week - to slide even further. Fundamental valuations of Yukos' would seem to have no basis at present, since the Kremlin's long-term aim remains unclear. Do they intend to remove ex-CEO Mikhail Khodorsovsky and his associates completely from the ownership structure, or will payment of the tax backs and fines be sufficient?

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