As has been widely documented, Russian stocks have been soaring since Donald Trump was elected as the 45th U.S. president.
For example, the VanEck Vectors Russia ETF (NYSEArca: RSX), the largest Russia exchange traded fund listed in the U.S., is higher by nearly 19% over the past month, bringing its year-to-date gain to 49%.
While it is no secret that Russia stocks and ETFs are benefiting from a “Trump bump,” that does not mean the good times cannot continue. Actually, some analysts believe Russian stocks can continue being leaders in the emerging markets arena.
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. Russia’s GDP is expected to contract again this year, extending what is becoming a lengthy recession. The sliding ruble has helped propel Russia’s benchmark Micex Index.
“According to analysts at Bank of America/Merrill Lynch, Russia has jumped ahead of China as one of the top emerging market economies,” reports ETF Daily News. “According to analysts at Bank of America/Merrill Lynch, Russia has jumped ahead of China as one of the top emerging market economies.”
Rivals to RSX include the iShares MSCI Russia Capped ETF (NYSEArca: ERUS) and the SPDR S&P Russia ETF (NYSEArca: RBL). RSX has a soaring small-cap counterpart, the VanEck Vectors Russia Small-Cap ETF (NYSEArca: RSXJ) while risk-tolerant traders can use the Direxion Daily Russia Bull 3x Shares (NYSE: RUSL) for potentially large gains in short order.
Supporting Russia’s outlook, market observers anticipate a more pro-Russia Trump administration may help ease tensions between two countries and support each others growth.
“Russia’s rise is no doubt directly tied to the recovery in crude oil prices. Around 64% of the country’s exports involve oil and natural gas, according to Wikipedia. Meanwhile, Turkey and South Africa bring up the rear in the rankings, due to ongoing political and economic turmoil,” according to ETF Daily News.
Further bolstering Russia-related ETFs, the ruble currency is at its strongest against the U.S. dollar in over a year due to the improved oil prices, a key Russian export. The U.S. dollar is now trading at around RUB60.9, compared to a low of RUB82.45 back in January,
Since the Russia country-specific ETFs do not hedge currency risks, a stronger RUB translates to higher USD-denominated returns.
For more information on the Russian markets, visit our Russia category.