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Market Vector Russia ETF Crashing After Extension Of Russian Sanctions

Market Vector Russia ETF Crashing After Extension Of Russian Sanctions

In just two months, the Market Vector Russia ETF Trust (NYSE: RSX) went from being the leading performer in the 800 U.S. exchange-traded funds in October to trailing 122 of them after crude fell to a 11-year low. Investors are expecting even further losses to come ahead.

Russia is the world's largest energy exporter, is being threatened by its first recession since 2009. International sanctions which are tied to the Ukraine conflict is worsening. As a result, the impact has had crude oil plunging.

On Monday, Brent crude sank to $36.15, the lowest since 2004. This month, central bank policy makers lowered the threshold for what they viewed as a "risk scenario" for the economy to $35 a barrel. It is predicted that a decline of as much as 3 percent in gross domestic product may occur next year.

Shares of the Market Vector Russia ETF were down about 1 percent at $14.35.

Russia is the world's No. 3 oil producer, and the country has only added to an oversaturated market in helping to lower oil prices to its lowest levels since 2004.

The country is being pressured by plummeting oil prices. Russia has been unable to boost its productions as much as its larger rivals have, with only having a rise of 0.5 percent in the first nine months of 2015, according to Citigroup.

"I know of no one who had predicted that Russian production would rise in 2015, let alone to new record levels," Edward Morse, Citigroup's global head of commodities research said to Bloomberg.

The Market Vectors ETF is comprised of more than 40 percent of energy company investments. The Market Vectors ETF traded at this year's high of $20.83 in May. Brent crude sold for more than $65 a barrel.


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