Russia may be rising in spite of itself, too.
Higher oil prices— thanks in part to the end of waivers on Iran oil shipments and a return to sanctions on Iranian crude—has oil over $70 a barrel. The ruble reacted this week to Washington’s removal of waivers was subdued, which is good for Russian oil companies who benefit from a weaker currency.
Since the beginning of the year, oil prices have increased by 38% with prices going up by around 9% this month alone.
Still, not only the oil sector is gaining in Russia. Yandex, the country’s biggest tech company, is up 38.2% in dollars. Mobile TeleSystems is up over 15%, which doesn’t look like much, but it’s better than the MSCI Emerging Markets Index. The VanEck Russia (RSX) exchange-traded fund is the second-best BRIC ETF, trailing the iShares MSCI China (MCHI) fund. Russia is the second-best emerging market this year.
Both Russia and China got beat up last year, most of it thanks to Washington politics.
But with the trade war on pause and with new sanctions on hold, China and Russia have had a good run for investors.
Russia has become more insular since sanctions began in 2014. Sanctions started due to Russia’s involvement in Ukraine in 2014. Russia annexed Crimea and backed separatists in east Ukraine provinces that were known as the country’s industrial hub, severely injuring the Ukrainian economy.
Russia’s central bank also deserves some credit. It’s kept inflation and interest rates under control. Also worth noting, the ruling United Russia party passed unpopular pension reform, helping clean up some Russian debt at a time when it remains unclear if Russia will ever be able to take on lower cost loans in dollars and euros. Russian interest rates are 7.75% and expected to remain unchanged at the next monetary policy meeting on April 26.
New companies are expected to list on the Moscow Stock Exchange later this year.
Dividend payouts in June will likely cause a reverse-course for the MOEX, but if oil remains over $70 and if the sanctions threat is no longer top of mind, Russia could beat out China this year as the best emerging market.
7.75 percent!!
Wow.
What are the average PE ratios?
How far we've come.
It’s not too late to buy SBRCY. It’s a bit risky but the bank is highly leveraged to the Russian stock market, oil/gas/PM prices, and has a significant position in bitcoin (acquired in the $200-300 range).