Russian stocks continued rebounding Monday, sending the Direxion Daily Russia Bull 3X ETF (NYSEArca: RUSL) higher by more than 2% and extending the bullish leveraged Russia exchange traded fund’s gain over the past month to about 19%.
RUSL tries to deliver triple the daily returns of the MVIS Russia Index (MVRSXTR). The Direxion Daily Russia Bear 3X ETF (NYSEArca: RUSS) attempts to deliver triple the daily inverse returns of that benchmark.
Russia poses an interesting opportunity due to its price relative to its fundamental valuation, making it an attractive option for value investing–a case for RUSL. Then again, the ramifications of US sanctions can rear its ugly head, which makes the case for RUSS. Rising oil prices have been helping the bullish RUSL.
“U.S. sanctions on Iran seem to have a real impact on the demand/supply balance, and I guess that many market participants who were shorting the top at ~$80 per barrel were caught off guard,” according to Seeking Alpha.
Additional Catalysts for Russian Equities
Other fundamental factors bode well for more near-term upside in Russian equities, which could mean RUSL adds to its recent upside.
Russian crude oil producers have also seen revenue from rising oil magnified due to the weakening ruble currency as crude oil is priced in U.S. dollars, which helped industry achieve record-breaking revenue and shrink debts.
“The third catalyst is the Russian Central Bank decision to stop buying foreign currency for reserves until the end of this year. This decision was meant to calm markets down at a time when one dollar bought you more than 70 rubles,” according to Seeking Alpha.
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Russian oil are an an attractive long-term play because of their low extraction costs globally, focus on domestic projects with a long reserve lifespan and growing dividend yields.
Last month, RUSL was Direxion’s best-performing leveraged bullish ETF. Interestingly, over the past 30 days, traders have been pulling money from RUSL and adding money to the bearish RUSS, according to issuer data.
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