ETF Trends
ETF Trends

Russia is looking to extend its export of energy to neighboring countries in light of recent events that have battered its energy sector and related exchange traded fund (ETF).

Deal with China. On Tuesday, Russian and China signed a $25 billion energy deal in which Russia will exchange oil for loans over the next 20 years, which would allow Moscow to diversify its clientele from its current dependence on Europe, according to Trend Capital. Russia is the world’s second-largest producer of crude oil.

Russia will pump 15 million tons, or 300,000 barrels a day, of crude oil per year to China on credit. The loan comes at a good time as Russian firms are pummeled by falling production and diminished global crude prices.

Turkey Proposal. A deal proposed by Russia to build four nuclear reactors in Turkey is also in the works, writes mark for Financial 24. The Russian and Turkish long-term contract on energy supplies would be worth $60 billion over 15 years.

The large Russian oil company LUKOIL also plans to invest $400 million in Turkey over the next decade and previously agreed to buy the Turkish fuel distributor Akpet.

What It Means. Investments like these could have a positive impact on Russia’s economy and its ETF after what has been a tumultuous year. Russia and its ETF are heavily dependent on the energy sector – the fund is weighted 38% in the segment.

  • Market Vectors Russia ETF (RSX): down 10.3% in the last week; down 4.3% in the last month; down 13.4% in the last 3-months; LUKOIL is 9.6%

ETF RSX performance

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.