Russia’s conflict with Georgia could wind up putting the expansion of both the country and its exchange traded fund (ETF) on hold.
The Russian stock market already took a dive to a two-year low as foreign investors left in numbers. And the fact that Russian oligarchs are affiliated with President Dmitry Medvedev and Prime Minister Vladimir Putin is adding risk to doing business with them in the minds of some, reports Landon Thomas for The New York Times.
Although Russian oligarchs wouldn’t necessarily feel the impact of a stock market hit upon their fortunes, some policy makers are thinking the best way to pressure and influence Kremlin is through coming down on the Russian businessmen in Europe.
Meanwhile, tensions with Washington are on the rise, too: the United States canceled a civilian nuclear cooperation deal, reports Nancy Marshall Genzer for Marketplace. The deal would have allowed Russia to import spent nuclear fuel from reactors supplied by the United States. Russia could have made billions storing or even reprocessing the fuel.
Russia’s recent clash with Georgia has come at a pivotal time. A six-year commodity boom has occurred, pumping life into the economy, created billionaires and international expansion would be the next step after loosening ties to Russia. There is great concern over Market Vectors Russia Index (RSX) and whether it can sustain through these times.
RSX is down 33.2% year-to-date.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.