“Russian taxation on the oil sector is very progressive and closely linked to underlying prices (with a 9m lag). Thus, while it’s intuitive for investors to assume that Russian oil and gas stocks should benefit from global turmoil which escalates oil prices, the actual benefit is meager. For every Dollar higher in Brent above $100, Russia oil companies effectively get only 10% of the additional revenue flowing back to them,” according to Seymour.
Seymour notes that because the largest Russian integrate oil companies, such as the ones that dot the top-10 lineups in RSX and the other Russia ETFs, are focused more on exploration and production than on refining, they are less levered to spikes in Brent futures.
RSX up more than twice as much as BNO over the past 90 days, indicating some global investors have focused more on the deep discounts and potential for dividend growth offered by Russian equities than correlations to oil prices. [Russia ETFs Have Potential]
Market Vectors Russia ETF
