“The Russian economy is at its strongest in years,” says Anna Hirtenstein in The Wall Street Journal. A “gusher of gas and oil revenues” has helped make the rouble one of the few emerging market currencies to hold its own against the dollar over the past year. Russia only needs oil prices of $40 a barrel to break even; this week Brent crude was trading at $83 a barrel. Soaring European gas prices help fill the coffers. Yet while Western oil majors rally, shares in state-controlled Gazprom are being left behind. “Geopolitics, not economics, are driving Russian markets.”
Certainly, intrepid bargain-hunters will find much to like in Russia, says Danil Kolyako on Seeking Alpha. The oil market looks likely to remain tight in 2022 and Russian stocks boast some of the most eye-catching dividend yields in the world. “The majority of Russian dividend-paying stocks are going to deliver dividend yields ranging mainly from 9% to 15% in 2021 and 2022.” That partly reflects strong commodity prices, but also the fact that with local interest rates at 8.5% – the result of “hardcore monetary policy” – dividends need to keep up.
Russian markets look “extraordinarily cheap”, agrees Paul McNamara of asset manager GAM. “Ukraine is the issue.” Despite being “the toast of emerging markets” for much of 2021, stocks have fallen 11% since October as Russian troops mass on its neighbour’s border and investors become wary, say Alexander Sazonov and Anna Andrianova on Bloomberg. If Russia were to invade Ukraine, the resulting sanctions would make it “impossible to know what you can and can’t do”, rendering the country “uninvestable”, says Elena Loven of Swedbank Robur Fonder, a Swedish asset manager that currently has investments in Russia. “If it invades Ukraine, Russia would disappear as an asset class.”
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Is Wise a trillion-dollar opportunity for investors?Foreign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How did emerging markets perform in 2024?Emerging markets underperformed their developed counterparts in 2024, but there are signs of recovery. We look at the biggest winners and losers of 2024, and the key trends shaping these markets
-
Why Wise could be worth a lot more than its share price
Foreign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
South Korean won hits 15-year low – what it means for 'Korea discount'After Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
-
Is Europe gearing towards a relief rally in 2025?Despite turmoil in France and Germany, Europe's stock markets could see a potential relief rally next year
-
Why undersea cables are under threat – and how to protect themUndersea cables power the internet and are vital to modern economies. They are now vulnerable
