Sorry, haters, but Russia suffered sanctions. She survived the oil at 35 dollars a barrel. And she went through two years of recession. Whatever you say about Vladimir Putin, his economic team has managed to cope with the situation. And that is why BlackRock argues that Russia is a lucrative field for transactions.
“If to speak about Russia, General attention is attracted by geopolitics. But despite all the negative opinions about Russia, from an economic point of view, it is surprising. We are raising the rating on Russian shares to “above market”,” says Gerardo Rodriguez (Gerardo Rodriguez), the Fund Manager of BlackRock in new York.
This year the index Fund Market Vectors Russia Small-Cap ETF (RSXJ) has risen to 8.34%, again surpassing the MSCI Emerging Markets indices. The Fund has grown by 140% over the past 12 months and, if it does not commodity or financial business with Russia.
After the annexation of the Crimean Peninsula in March 2014, against the Russian oil and gas companies, as well as against the biggest banks were sanctioned. In that year, the tensions between the West and Russia has grown rapidly since a US-supported Kiev took control of the new government headed by Arseniy Yatsenyuk, which caused panic in Moscow. Russia immediately began to support anti-government militias in the Eastern cities of Ukraine. Although Russia has long denied supporting the separatists, and later Putin admitted that Russia had helped them to deal with the government of Ukraine.
Russia and Ukraine signed a peace agreement in Minsk, capital of Belarus, but the lifting of sanctions depends on whether to respect the ceasefire regime in Donetsk and Lugansk regions in Ukraine. It also depends on the election, the prospect of which leaves Ukraine in a difficult position, because the population of these areas is more likely in Russia than against it. As noted by the Prime Minister and Theresa may (Theresa May) in Washington on Friday, January 27, the lifting of sanctions depends on settlement of crisis in Ukraine by both parties.
The political hype about malicious Russia no longer stands in the way of investors. According to EPFR Global in Cambridge, Massachusetts, during the last two weeks in Russian securities was invested a few million dollars.
Rajiv Jain (Rajiv Jain), investment Director of the company GQG Partners also betting on Russia. Next week starts the Jain Foundation GQG Partners Emerging Markets Equity Fund (GQGPX), where Russian stocks will take a good position.
“Always have to analyze the information from the messages coming from Russia, says Rodriguez. After the annexation of Crimea was difficult to understand what is actually happening based on the headlines we see here. Therefore, we pay attention to the actual data, and these data show that the Ministers of Finance of Russia are still very traditional in its approach to the management of the economy. To give them credit. From the point of view of fundamental indicators, Russia is out of the critical situation a few months ago. And if we add to this the potential change in some areas and desire trump to build a good relationship with Putin, all of this testifies in favor of Russia”.
In December, industrial production in Russia is pleasantly surprised, however, consumer demand remained weak. Industrial production rose in December by 3.2% compared to last year and by 2.7% in November, twice exceeding market expectations. This is the third consecutive month, industrial production in Russia is increasing, showing significant annual growth of 2.6% in 2016, while quarterly GDP was zero.
Retail sales fell by almost 6% due to the recession and falling incomes. “Renaissance Capital” investment Bank in Moscow, believes that the incomes of Russians will grow and that they will again begin to spend money. If the price of oil will remain relatively high, the year 2017 promises to be favorable for Russian stocks.
“The improvement of production and the growth of real wages will lead to a significant rise of the Russian economy this year”, — analysts of “Renaissance” headed by Oleg Kuzmin. If all goes well, this year, GDP growth in Russia will be 1.7%.
Excuse me, Senator McCain!