Russia’s stockmarket rally isn’t over yet

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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