Turmoil in Russia Over Election Results

Thousands of people protested the Russian election results on Monday. An estimated 5,000-10,000 people were in attendance, many of which were detained by authorities. According to the election results, Putin's United Russia party won 50% of the vote. This was down noticeably from the last Russian election, in which Putin's party won 64% of the vote. Still, to protestors even 64% was too high. Those protesting alleged that Putin's party had rigged the elections through ballot stuffing and other measures. US Secretary of State Hillary Clinton stated that the US had "serious concerns" over the conduct over the Russian elections. Ratings agency Fitch commented on the election results, stating that they would not affect the agency's rating. Fitch currently maintains a BBB rating on Russia with a positive outlook. Since the beginning of 2010,

Russia's economy

has been growing at a steady rate. However, the economy has been a recent downward trend and Russia's GDP growth rate has been moving steadily lower since the beginning of the year. Russia's economy bears somewhat of a similarity to Canada's. The country is fairly dependent upon its natural resource exports, particularly its exports of hydrocarbons like oil and natural gas. As the economic situation in Europe has intensified in severity, Russia may be feeling the effects. Most of Russia's energy exports are piped directly to Western Europe, and if those economies are suffering, the demand for Russia's exports may fall. Still, the price of crude oil remains elevated. As tensions have flared with Iran, market participants may be pricing in supply chain disruptions in the future. If oil prices stay elevated, Russia could benefit. Of course, the country maintains a sort of vague alliance with Iran, so it will be interesting to see how the situation plays out.

ACTION ITEMS:

Bullish:

Traders who believe that Russia remains an intriguing place to invest given its immense natural resources might want to consider the following trades:

Go long a Russian index fund. Market Vectors TR Russia RSX is an ETF which may give investors exposure.

Go long crude oil. Presumably, if Russia is enjoying economic growth, crude oil will be maintaining a high price level.

Bearish:

Traders who believe that Russia could suffer due to Eurozone stressors may consider alternate positions:

Go long the US dollar. If Russia is contracting, other emerging markets may be suffering as well. In that scenario, the US dollar could benefit as traders run to safety.

Short other emerging markets. Although they have not moved in tandem exactly, emerging markets have generally moved in a similar direction. A correction in Russia could correspond with a correction in a different emerging economy, such as Brazil.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Market News and Data brought to you by Benzinga APIs