Foreign investors withdrew from the “boring” Russian stocks $435 million


Starting in 2016, investors withdrew from focused on investments in Russian assets exchange-traded funds (exchange-traded funds (ETF) in excess of $435 million, according to Bloomberg, citing its own calculations. Large amounts lost only ETF that invests in China and Taiwan.

Interviewed by Agency analysts explain the behavior of investors fears regarding the cessation of growth of stock quotes of the Russian companies after the extinction of the oil rally (starting in 2016, the RTS index grew by more than 20%, a barrel of Brent crude oil over the period rose by about a third).

“At some point, the ETF was a good tool for tactical investments in Russia, but the situation changed and investors began to leave. Russian shares rise, when increasing [the price of] oil, and fall, when [the price of] oil falls, but now it’s pretty boring without a big market potential,” said Bloomberg, portfolio Manager at R Squared Capital Management LP Rudolph-Riad Eunice, last year sold the package in the largest exchange-traded Fund specializing in Russia, which he held since 2009.

The slowdown in oil prices, according to analysts, will lead to the fact that the recovery of the Russian economy will be slow for a long time. For investors that means it’s time to look for attractive opportunities in other markets, said Eunice.

At the same time, Tim Love, Manager of the GAM UK Ltd, which manages assets of $130 billion, sees an opportunity to continue investment in Russia, but not through the ETF, and due to purchases of shares of individual companies, the price of which is already incorporated the impact of Western sanctions and the risks of lower oil prices.

“Some sectors of the Russian economy feel better than the rest, and I think it makes more sense to buy individual stocks than to invest in ETFs,” explained Love.

In 2015 investors, despite the fall in Russian stocks for the third consecutive year, invested in the Russian funds of about $442 million.

The President of Russia Vladimir Putin at a meeting with foreign investors during the St. Petersburg international economic forum (SPIEF) on June 17 announced the openness to implement new projects.

“Putin’s speech was to ensure that all will be well. We were told that if we want to do business in Russia will help us, the government is very friendly to business. Many smart people gathered in this room, and they agreed with what the President said,” — shared his impressions the investor Jim Rogers. According to him, before dinner, he was a little worried that Russia is once again closed, but now, not so concerned about this: “Putin said the things we wanted to hear from him, and was convincing,” explained the financier.