Will Russian Stocks Return to US Markets?
It’s time to end Biden’s foolish war in Ukraine.
This conflict has been one of the great tragedies of this century. Two nations who were once brothers turned against each other.
Perhaps 700,000 soldiers have died, with another 500,000 wounded.
Countless civilians have been displaced, and more than 30,000 have died. Cities and suburbs have been razed to the ground.
Beside the substantial humanitarian benefits, this war’s conclusion will also have wide-reaching implications for investors.
Let’s dig in.
A Chance for Peace
A week ago Russian President Putin shocked the world by stating, “If the victory wasn’t stolen from [Trump] in 2020, perhaps the war would never have happened.”
President Trump agrees with this sentiment, and has strongly expressed his desire to end the war.
Now we’re getting more hints that the war may finally be nearing its conclusion.
The Financial Times reports that European leaders are now considering restarting major gas imports from Russia as part of a peace deal:
European officials are debating whether Russian pipeline gas sales to the EU should be restarted as part of a potential settlement to end the war against Ukraine, according to people familiar with discussions.
Advocates of buying Russian gas argue it would bring down high energy prices in Europe, encourage Moscow to the negotiating table, and give both sides a reason to implement and maintain a ceasefire.
Since the bulk of Russian pipeline natural gas into Europe was severed, energy costs have soared and deindustrialization has spread throughout the continent.
The Fate of Russian Stocks
After Russia invaded, the country’s stock market tanked. ETFs and shares in Russian companies plummeted.
It didn’t take long for Russian equities to be removed from U.S. and most global markets. Regulators and Biden admin officials moved quickly.
I myself owned Russian ETFs, primarily the VanEck Russia ETF (RSX). Yields were high and growth was slow but steady.
After the war began those shares were removed from U.S. markets. They now exist in a sort of purgatory for misbehaving equities. They cannot be bought or sold, and are frozen indefinitely.
This action was a bad look for American stock markets, which are supposed to be the freest and fairest in the world. But the Biden admin showed the world that he was willing to delist shares of countries that fall out of favor.
If Trump and Putin manage to come to an agreement, I believe sanctions on Russia would be ended or at least lessened as part of the deal.
This could mean that Russian shares would be re-introduced to U.S. and global markets.
If these equities are re-listed, I’d imagine they would trade at tremendous discounts to historic norms.
In other words, it could be an incredible buying opportunity. Even before the war, Russian stocks were trading at about 9x earnings. Today they might be trading at a P/E of 5 or even less.
From 1999 to 2008, Russian stocks soared 2,400% during the commodity boom. The country’s market began that epic run after a hard period following the collapse of the Soviet Union.
In 1999, nobody wanted Russian stocks. But by 2008 they were one of the hottest emerging markets in the world.
Personally, I believe we’re due for another commodity boom, and Russia could be a very interesting way to play it. IF access to the market is restored as part of a peace deal, of course.
We’ll keep an eye on this story and let readers know about future developments.
Here’s to hoping for peace.
Disclosure: Author owns Russian equities including RSX (which are currently frozen).
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