I’ve been seeing a lot of bullish articles regarding Russian equities, even though—and let’s get this out of the way immediately—obvious geopolitical and corruption risks remain.
Reuters: Russian stocks to climb higher throughout 2022
Russian stocks have been on the rise after collapsing in the first quarter of 2020 when the COVID-19 outbreak became global, gaining support from a recovery in oil prices, an easing risk of sanctions and an influx of retail investors.
In addition to oil prices, a growing market of retail investors in Russia seems to be significant. We’ve all seen how much retail investors can affect the market these days.
Not to mention, the construction of the Nord Stream 2 pipeline finished the other day, but flows haven’t started.
WSJ: More Russian Companies Set to Join New York IPO Frenzy
“The environment is quite conducive right now,” Viktor Szabo, an investment director at Aberdeen Standard Investments in London. “Growth has been stable and tensions with the U.S. appear to have eased.”
Geopolitics is another key factor contributing to the Russian IPO renaissance. Though relations between the U.S. and Russia remain near their lowest since the Cold War, the summit in June between President Biden and his Russian counterpart, Vladimir Putin alleviated some market concerns about tough new sanctions, investors say.
Although geopolitical concerns should never be nonexistent with Russia, it seems they are at their lowest in years. If you pay attention to geopolitics news, you may have also noticed a rising popularity in geopolitical papers for the idea that the US should court Russia in order to counter China.
Financial Times has also run articles about Russia’s “market boom” and IPO spree as well as the bullish sentiment on Russia’s massive agriculture industry:
Investors have also noticed, attracted by the longer-term potential. Jim Rogers, who co-founded Quantum Fund with George Soros and is now a renowned bull on Russia and China, has invested in Russian fertilisers and agriculture via Phosagro and believes the sector’s success is only starting.
Also relevant is news that Russia’s Sberbank is undertaking a push to become Russia’s Amazon.
iShares Russia ETF $ERUS is up 24% YTD while VanEck Russia ETF $RSX is up 23.44%. They have dividend yields of 4.12% and 2.72%, respectively.
I had looked into these ETFs a couple years ago and wish that I had gotten in sooner.
Gazprom is usually only available OTC for retail investors, but Yandex $YNDX is listed on American exchanges and is actually included in a number of ETFs involving technology like self-driving cars. Russian equities are not as far fetched as you may think.
What are your thoughts on this news and have you taken an interest in Russian equities at all?
