Will a Trump presidency benefit Russian stocks?
London-based hedge fund EDL Capital sees the election of Donald Trump as the next US president as beneficial for Russian stocks. Bloomberg expressed this opinion in a letter.
Edouard de Langlade, who manages the EDL Global Opportunities Fund, said that an improvement in relations between the United States (SPY) (IVV) and Russia will help them jointly combat terrorist threats from groups such as ISIS (Islamic State of Iraq and Syria), a common enemy of both nations. According to Langlade, this collaboration can bring stability to the world in general and the Middle East in particular.
Economic sanctions may be lifted
Russia’s annexation of Crimea led the Barack Obama administration to impose economic sanctions on Russia. These sanctions were aimed at impacting the Russian economy and the flow of investments into the country. They were targeted at Russia’s defense and energy industry and also at important Russian banks and individuals. Because of these sanctions, companies such as Rosneft (OJSCY), Novatek (NOVKY), and Gazprom (OGZPY) were negatively impacted.
With Trump’s perceived warmth toward Russian President Vladimir Putin during the US presidential campaign, the possibility of these economic sanctions being removed has emerged. If this happens, not only will it provide a boost to the Russian economy, but it will also result in a surge of funds flowing into Russia. Langlade noted that such inflows would benefit Russian stocks.
With Goldman Sachs recently upgrading its view on commodities prices, an upturn in energy prices could greatly benefit Russian stocks and the economy. That would reflect in ETFs such as the VanEck Vectors Russia ETF (RSX), the iShares MSCI Russia Capped (ERUS), and the SPDR S&P Russia ETF (RBL).
Apart from Russian stocks, EDL Capital is also bullish on the ruble. Let’s look at its views on Russia’s currency in the next part.