Higher oil prices and much higher optimism about a global economic recovery have boosted the performance of the emerging market of Russia,taking the exchange traded fund(ETF) higher.
Russia was the worst-performing emerging market last year, however, the country has seen a reversal as of lately.
According to The Wall Street Journal, investor sentiment with Russia is tied to oil, and Monday saw oil at $68 per barrel. Better yet, valuations for Russia are still cheap relative to other emerging markets, report Denis Maternovsky and William Mauldin for Bloomberg. One expert says the gain in the short-term is uncertain, since the fundamentals don’t seem to be in place. A bad piece of news could send the fear factor flying again.
Nevertheless, Russian officials see an economy that is on its way to recovery, and should pick up for the second half of the year. The economy this year is expected to contract between 6%-8%, less then the 9.8% that the first quarter of 2009 saw, reports BusinessWeek.
If the “bad news” comes through, protect yourself with an exit strategy. We exit when a position declines below its 200-day moving average or 8% off the high.
- Market Vectors Russia (RSX): up 78% 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.