The VanEck Vectors Russia ETF (RSX) is a fund that offers exposure to equities from Russia, which include publicly-traded companies that are incorporated in Russia or that are incorporated outside of Russia but have at least 50% of their revenues/related assets in Russia.
Several reasons at once make me think it’s not too risky to buy the RSX right now.
#1 ‘World First’ COVID-19 vaccine
On Tuesday, the Russian President announced the approval of a coronavirus vaccine.
Now, I find it difficult to comment on how effective this vaccine is. But the news is generally positive. It’s a good background.
#2 Oil Price
In August, Russia and the OPEC countries began to increase oil production in accordance with the OPEC++ deal. But, so far, this has not negatively affected the oil price. Moreover, there is even a slight upward trend:
I want to remind you that Russian energy companies form 40% of the RSX’s portfolio, and they are, in turn, mainly represented by oil companies.
#3 Macro Data. The worst is probably over.
In June, the growth rate of industrial production in Russia fell to 9.4% YoY. This is slightly less than in the previous month:
The growth rate of the mining industry, the basis of the Russian economy, was extremely negative:
At the same time, as I have already noted, in August, Russia got the opportunity to increase its oil production. Given the relatively stable oil price, the overall situation in the Russian industry can be expected to improve.
I also want to point out that the seasonally adjusted IHS Markit Russia Manufacturing PMI is almost back to the 50.0 neutral mark:
So, one should expect the RSX price to increase to $26 in the coming month.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.