Traders flee Russia ETF as Ukraine standoff continues President Vladimir Putin’s intensifying standoff with the United States and its allies over the war in Ukraine has stock investors pulling money out of Russia as they pile into other emerging markets. Traders took $12.3m out of the Market Vectors Russia ETF, the largest US dedicated exchange-traded fund tracking the nation’s stocks, last week through July 24, according to data compiled by Bloomberg. The moves added to redemptions of $90.8m in July, putting it on pace to be the biggest monthly outflow since February. Withdrawals from the Russian ETF are accelerating as the US and European Union seek to punish Putin for supporting separatists in eastern Ukraine with deeper sanctions intended to squeeze the $2tn economy. The International Monetary Fund said on July 24 that Russia’s Dross Domestic Product would expand 0.2 per cent this year, less than half the government’s forecast of 0.5 per cent growth, after increasing 1.3 per cent in 2013. Chief investment officer at Twenty20 Investments, Irene Bauer, said emerging-market ETFs make up about 25 per cent of the firm’s portfolio, versus “hardly any exposure” six months ago, while it is avoiding Russia altogether. The London-based company specialises in ETFs. “We are not investing in Russia because the tail risk is too high,” Bauer said by phone on July 25. “You just don’t know where the crisis in Russia is going. Political risk is higher than in other emerging markets, and the economics don’t look very good.” Flows into emerging-market ETFs turned positive for the year on July 24, by $109m, reversing investor flight that had drained as much as $13.9bn in the first two and half months of 2014. Outflows from the Market Vectors Russia ETF (RSX) over the past two weeks were more than double the withdrawals of any of the other 228 emerging-market funds tracked by Bloomberg. Russia’s benchmark Micex Index dropped 1.2 per cent by 12:47pm in Moscow. State-run Sberbank, the nation’s biggest lender, fell 1.8 per cent. OAO Rosneft slumped 1.3 per cent after the Permanent Court of Arbitration in The Hague today ordered Russia to pay $50bn in damages to the former owners of Yukos Oil Co., according to Head of GML Ltd.,Tim Osborne, the former holding company for Yukos’s main shareholders. The Bloomberg Russia-US Equity Index on July 25 posted a third straight weekly drop, falling 3 per cent to 85.20. A ban on European purchases of bonds or shares sold by Russian state-owned banks is among options the EU is considering, according to a proposal presented to member states last week. ift.tt/1Aw3wEB ift.tt/1ls1hrf [[Boost your social presence with NAIRALIKES nairalikes ]] #nigeria x #nairalikes #vanguardng
Posted on: Tue, 29 Jul 2014 23:17:28 +0000
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