RSX’s ascent is arguably made all the more surprising when considering the energy sector is by far the ETF’s largest sector allocation, the Russian economy’s dependence on revenue from energy exports and the reluctance of major oil-producing nations to pare output in the face of low prices and high supplies. Russia is the largest oil-producing country that is not a member of the Organization of Petroleum Exporting Countries (OPEC).
Economic bservers are remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year.
The $2 billion RSX is home to some of the emerging world’s least expensive stocks as highlighted by the ETF’s price-to-earnings ratio of under nine and a price-to-book ratio below one, according to issuer data.
“The argument against Russia is that, for the foreseeable future, it will still be Putin’s country and too bogged down by corruption and byzantine bottlenecks to grow much, under even the best of circumstances. The economy expanded by a meager 1.3% in 2013, when Brent oil averaged more than $100 a barrel. With Brent under $50, the nation will struggle,” according Barron’s.
