Haters will continue to hate. But to hate Russia as a place of investment this year as unproductive, as in 2016, when the index is capitalization of small and medium-sized companies rose by more than 95%. And now, when Russia took first place in the world for the extraction of hydrocarbons, overtaking Saudi Arabia, as the new administration Donald trump gave a signal that it intends to put an end to anti-Russian hostility, investors again rushed to the country.
Compared to other emerging markets Russia has the largest inflow of foreign portfolio investment. More than China. More than India, Brazil and Mexico. According to EPFR Global, last week, the second week in a row there was a net inflow of capital in the global funds of emerging markets.
While net capital inflow in Russian equities is 472 million dollars, while last year it was £ 837 million.
Russia today is the most popular emerging market in terms of inflow of foreign investment. Last year it was 1.6% of total capitalization of the Russian stock market after three consecutive years of decline. There is only one country where the investment flows in percent of total market capitalization more than that of Russia — Colombia. Investors there made a bid for a peace agreement with the Revolutionary armed forces of Colombia.
The money is coming in ever larger volumes, and those in 2016 held the stocks, begin to sell. Beginners in Russia are losing money, as bet on the improvement of relations between Moscow and Washington, which this year could lead to the lifting of economic sanctions. The Market Vectors Russia Fund, through which investors mainly buying up old shares this year fell by 0.5%, but the MSCI Emerging Markets index rose 4.9%. Those investors that can tolerate a decrease in liquidity, turn in the direction of the securities small-cap ETF (RSXJ), which also owns VanEck Vectors Russia. This Fund is breaking all records, up to the current month 6.96% for the past 12 months to 137.5%. Better Fund emerging market just yet.
Some investors alarmed by the “regime change” in America. Meanwhile, many analysts have expressed concern about infectivity of Breccia and believe that the virus in the current year will apply in France. Political upheavals can be very serious. On 23 April France will elect a new President.
Russia, like other emerging markets, can also benefit from changes in monetary policy in key economies.
Wall Street agree that the fed and other key Central banks have reached practical limits in its monetary policy. Japan ended its experiment with negative rates. Europe will follow her. Investors are cautiously optimistic about the changes in fiscal and regulatory policy of the United States, but about the trade optimism they have much less although they still adapt to new realities.
The impact of democratic regime change in the coming months also will affect asset prices in emerging markets, market liquidity and capital flows in emerging markets. The inflow of capital into Russia this year will be an anomaly and not a permanent trend.
Thanks to the recovery in oil prices and low interest rates, the recession in Russia is over. The market has shown good results, and many of the shareholders in 2016 to make a profit. But on Monday the Moscow Bank “the Renaissance the Capital” has repeated its recommendations to the Russian market, saying its overloaded.
Real wages began to show growth, and in 2017 may open for further rate cuts of 200 basis points.
Any market that for the last 12 months rises to 57% in dollar terms that was recorded by the Fund the Market Vectors Russia vulnerable to the realization of market profit. But investors should not take this as a negative signal.
“We continue to meet investors, especially in the United States who underestimate Russia and believe that global money… still missing,” says Daniel Salter (Daniel Salter), the governing strategy of the global securities in the Department of “Renaissance” in London.
“The global uncertainty caused by Brexton, trump, elections in Italy, France and Germany, we see that Russia has a strong position among emerging markets,” notes Salter, stressing that it will look good only if oil prices hold at current levels.
Russia continues to please investors and moving forward.
Western sanctions and the flow of negative headlines has not repaid the investors ‘ interest in Russia. If French and Italian voters this year will vote against representatives of the establishment, you can expect the easing of sanctions.
The situation in Washington will remain difficult, as many Republicans dissatisfied with the tramp, will try to tighten sanctions against Russia for what she allegedly hacked the email of the National Democratic Committee and campaign Manager, Clinton John Podestà. Russia says it didn’t, however, us intelligence agencies claim that it is not. Such a confrontation is beneficial to the opponents of Putin among the leaders of Congress, e.g. John McCain and Lindsey Graham, who this week promised to give Trump a list of new sanctions to punish Russia for interference in the November election.
If you do not watch the political soap Opera, progress on the economic front is obvious. Because of this Russia in January became a great center of attraction of money.
Impressive its success in curbing inflation. In March is expected to reduce interest rates by 50 basis points.
The ruble remains stable, and there is a noticeable decline in the outflow of capital.
Russia has demonstrated its resilience in the face of increasing rates of the fed, because it has surplus current account balance; and the majority of Russian companies due to sanctions in any case there is reason to hope low lending rates in the us and European markets. The rate increase is irrelevant. Russian companies have focused on finding internal sources of funding, where rates are measured in double digits and declining.
Russian investment banks make more optimistic forecasts on profits. Russia has clearly benefitted from the trump’s victory in the elections, at least in the views of people.
Renaissance recommends that investors who were not interested in ETFs, pay attention to Sberbank, Aeroflot, Gazprom, LUKOIL and PhosAgro, as well as other company.
