Market Overview

Russia ETFs Hit 5-Month High On Easing Ukraine Tensions

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The Russian stock market hit a new five-month high this week as President Vladimir Putin asked for a cancellation in the use of force against neighboring Ukraine. 

This news sent stocks in both countries soaring to new heights since the conflict that led to the joining of the Crimean peninsula with the Russian Federation. 

The Market Vectors Russia ETF (NYSE: RSX) is the most widely traded ETF that tracks Russian stocks. 

RSX provides exposure to 49 publicly traded companies in Russia with a market-cap weighted focus.  The net expense ratio is listed at 0.63 percent. 

Since hitting a low and entering bear market territory in March, RSX has blasted off to new highs as a result of the peaceful political resolution.

This ETF has gained nearly 30 percent from its low and still has more room to run on the upside to regain its 2013 highs. 

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Investors seeking a global value opportunity were quick to point out that the oversold nature of the Russian markets were a perfect recipe for a second quarter resurgence. 

Since March 1, an astounding $719 million in new assets have found their way into RSX to play this comeback. 

From a technical perspective, RSX has also just regained its 200-day moving average which may provide an additional level of confidence for traders interested in this theme. 

Another key ETF with a focus on large-cap stocks that competes with RSX is the iShares MSCI Russia Capped ETF (NYSE: ERUS).  This fund provides exposure to just 23 companies and is overwhelmingly weighted towards the energy sector

The current expense ratio of ERUS is listed at 0.61 percent. 

Gazprom OAO is the largest holding in ERUS with 23 percent of the total portfolio allocation.  That focused nature means ERUS is more susceptible to the machinations of these mega companies than RSX.

The concentrated portfolio and energy sector dominance is clearly working in its favor, as ERUS has gained over 35 percent since the March low. 

Further gains in Russian stocks will likely be governed by additional steps to promote a peaceful resolution with Ukraine. 

In addition, the heavy natural resource-based economy could continue to prosper with commodity prices surging through the summer months.

Posted-In: Gazprom RussiaEmerging Market ETFs Top Stories Trading Ideas ETFs Best of Benzinga

 

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