Cease-Fire Talks Stoke Rallies for Russia ETFs

On news that Russia and neighboring Ukraine are nearing a cease-fire to end months of bloodshed in Eastern Europe, Russian stocks and U.S.-listed exchange traded funds soared Wednesday with the country’s benchmark Micex Index surging 3.6%.

News agencies reported early Wednesday that Russian President Vladimir Putin and Ukrainian President Petro Poroshenko had been in talks about a cease-fire and that they were taking steps toward ending a “conflict that the United Nations estimates has cost at least 2,600 lives,” reports Bloomberg.

The news sent shares of the Market Vectors Russia ETF (NYSEArca: RSX), the largest and most heavily traded Russia ETF, higher by 5.2%. Volume in RSX had already eclipsed the daily average by 11:30AM Eastern time.

The iShares MSCI Russia Capped ETF (NYSEArca: ERUS), the second-largest Russia ETF, and the Market Vectors Russia Small-Cap ETF (NYSEArca: RSXJ) added 5.4% and 3.7%, respectively. RSX, ERUS and RSXJ are the three best-performing non-leveraged ETFs to this point in Wednesday’s U.S. trading session.

Enticed by some of the emerging world’s lowest valuations and amid hopes for peace, investors scampered into Russia ETFs last month, adding nearly $213 million to RSX. That marked the ETF’s best month of inflows since March. [Russia Bears Depart as ETFs Gain Cash]

However, the situation in Eastern Europe remains tenuous, underscoring the volatility that comes along with investing in Russia ETFs. Poroshenko backtracked from some language in the cease-fire pact while Putin said the pair had only discussed an agreement, reports The Guardian.

Ukraine’s Prime Minister Arseny Yatsenyuk offered up some choice words for Russia, calling the country a “terrorist state” earlier Wednesday.