Chart 1: Russian financial markets stage a recovery from panic in March
Source: Short Side of Long
It looks as if those who bought the Russian stock panic sell-off during the Ukraine Crisis have done very well for themselves. As a matter of fact, this is currently the best equity market rally internationally.
Technically speaking, it seems that the (NYSE:Russian market) has put in a double bottom and started to rally again, recovering almost all of the losses. Valuations remain ridiculously cheap and the dividend yield is a lot more competitive then the S&P 500 or the U.S. 10-Year Treasury Note.
The ruble has done OK too, while bond yields have started to fall. In an article titled “World’s Best Stock Rally in Russia Fed by Putin Detente“, Bloomberg summarizes the rally very well, stating:
Russian stocks are headed for the best performance among the world’s major equity markets for a second straight month as President Vladimir Putin pulls back from the confrontation in neighboring Ukraine.
The dollar-denominated RTS Index has rallied 9.7 percent to 1,421.07 in Moscow this month after adding 12 percent in May. The measure has gained 16 percent this quarter, making it the best performer among 93 equity gauges globally over that time after benchmarks in Argentina and Peru. The Bloomberg Index of the most-traded Russian shares in the U.S. has climbed 7.8 percent in June.
If you subscribe to my newsletter, you would remember that I bought some Russian stocks in the second week of March. Currently, the market has rallied very powerfully off the lows and could be considered short term overbought, however if by some chance the sell-off returns, I will be adding to my position. This is currently the only place in the world where I own stocks.