Russia ETFs See Steep Decline On Plane Crash
Russian equities were mired in a steep decline on Thursday as news of a plane crash on the Ukrainian-Russian border sent shockwaves through the financial community.
Stocks in this emerging market nation had recently hit their highest level in five months before the breaking news ratcheted up selling pressure.
The Market Vector Russia ETF (NYSE: RSX) is the most widely-followed index of 50 publicly-traded companies located in or deriving a significant portion of their business from Russia. This ETF has more than $1.6 billion in total assets spread primarily among large-cap stocks in the energy and materials sectors.
At one point on Thursday, the RSX had declined more than seven percent during the trading session on significantly higher-than-average volume.
The RSX is now down 14.48 percent on the year amid concerns over sanctions against the country and further social unrest. In order to restore calm to the markets, Russia will likely need to work with world leaders to ensure they were not responsible for any wrongdoing in this incident.
Other ETFs that were adversely affected by this event include the Market Vectors Russia Small Cap ETF (NYSE: RSXJ) and iShares MSCI Russia Capped (NYSE: ERUS), which declined 5.76 and 6.99 percent, respectively.
Bloomberg also reported that the Russian ruble currency lost 2.3 percent versus the dollar in Moscow.
In response to heavy global selling, the CBOE VIX Volatility Index spiked more than 30 percent on Thursday as well, sending the iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) sharply higher.
The VIX Index is widely considered to be a measure of expected fear in the market based on S&P 500 Index options prices.
The summer doldrums and slow grind higher in the global equity markets have now been replaced with a sense of concern about the potential for further selling ahead.
However, additional technical and fundamental data will be needed to evaluate whether this is a short-term dip or the start of a more pernicious decline.
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