The VanEck Vectors Russia ETF (NYSEArca: RSX), the largest Russia exchange traded fund, is one of the best-performing, non-leveraged, single-country emerging markets ETFs this year.
A gain of 38.3% proves as much and RSX has recently been building on that impressive performance.
For example, the major Russia ETF is up more than 14% over the past month and its chart shows signs of a breakout. In just the past week, RSX, the most heavily traded Russia ETF listed in New York, is higher by about 7%.
Onlookers 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. 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.
“That feat, however, is in large part due to the extensive depreciation in the Russian Ruble in recent years. Thus, the MICEX, denominated in Rubles, has seen its nominal value rise to all-time highs,” according to See It Market. “Russia is unique, however, in that they also list a major stock market index denominated in U.S. dollars. The Russian Trading System Index (INDEXVIE:RTX) consists of 50 stocks on the Moscow Stock Exchange and is calculated in Dollars. This fact puts value of this Russian Stock Market Index (RTSI) at more than 50% below its 2008 all-time high.”
Russian stocks recently got a lift after President Vladimir Putin said Russia, the world’s largest energy exporter, is ready to join OPEC in limiting oil production with either a freeze or a cut, Bloomberg reports. Looking ahead, Putin hoped OPEC would agree in November to limit crude oil production and promised Russia was ready to back such a decision. Russia is the largest non-OPEC producer in the world.
OPEC recently unveiled a major production cut, one that Russia has said it will go along with, but that remains to be seen. Energy is by far the largest sector weight in RSX.
“We have seen some resource-related indices seemingly breaking above similar trendlines of late, though we’re not sure that those “breakouts” will be immediately sustainable. Similarly, we would expect that, even if the trajectory for Russian stocks is pointed higher, they may struggle at least temporarily at present levels due to the potential resistance – whichever way you look at it,” adds See It Market.