Russia’s stockmarket rally isn’t over yet

published 31 March 2017

Russian stocks jumped sharply in 2016, but this year they have slipped by 4% the second-worst showing by an emerging market after Greece. One of the key reasons for the rally was the prospect of President Trump lifting US sanctions on Moscow. "But with no signs" that he will indeed do so, says Dimitra DeFotis in Barron's, "investors are focusing on Vladimir Putin's alleged meddling in the US presidential election".

Still, it seems too early to call the end of the upswing. Trump's administration is chaotic and unpredictable, so its pro-Russian inclinations should not be written off too readily. Meanwhile, the economic backdrop has improved. The gradual oil-price recovery has boosted exports, alleviating a wrenching recession.

Growth is set to turn positive, with easing inflation providing scope for lower interest rates. Along with higher wages, that should embolden consumers: retail sales have shrunk for 26 months in a row. The government remains stable, albeit dysfunctional, and there is even talk of structural reform. The market is also extremely cheap on a cyclically adjusted price-earnings ratio of six.

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Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.