Last week, international investors invested in Russian stocks the maximum amount in ten months. According to Emerging Portfolio Fund Research (EPFR), the Russian stock market has increased by $ 180 million. The main inflow continues to go through global funds, but in the absence of new sanctions, interest is also being restored to funds specializing in Russia.
According to Kommersant’s estimates, based on the reports of BCS Global Markets and BofA Merrill Lynch Global Research, which take into account Emerging Portfolio Fund Research (EPFR) data, the amount invested by international investors for the week ending February 6 was $ 180 million. This result is $ 20. million more inflows recorded a week earlier ($ 160 million), and is the maximum since April 18, 2018 ($ 280 million).
The continuous flow of investment continues for the fifth week in a row. During this time, foreign investors have invested almost $ 760 million in the Russian stock market. If in the first weeks the entire inflow went through global funds, last week there was interest in country funds focused exclusively on the Russian stock market. According to EPFR, last week the funds of this category attracted $ 32 million from customers – the maximum weekly attraction since the end of October last year.
The return of foreign investors to the Russian market is taking place against the background of a general growth in demand for assets of developing countries. According to the EPFR, over the past five weeks, funds whose investment policy has focused on emerging markets have attracted more than $ 16 billion. think about stopping the reduction of balance. “In essence, this means the resumption of the era of cheap money and excess liquidity, which primarily benefits developing markets,” said Vladimir Vedeneev, investment portfolios manager at Friedrich Wilhelm Raiffeisen.
If the global growth in demand for risky assets contributes to the softness of the American financial regulator, then an improvement in the geopolitical background leads to the restoration of interest in Russian funds. Since the beginning of the year in the United States rampant shatdaun, because of which American politicians have no time for Russian sanctions. In addition, in January, the US Treasury Department lifted sanctions from Oleg Deripaska’s Rusal, En + and Eurosibenergo companies. “The lull in the fields of anti-Russian sanctions rhetoric led to an increase in the attractiveness of ruble assets than to take advantage of hotheads,” notes Farit Zakirov, Trinfiko Group’s portfolio manager.
In such circumstances, you can count on a further flow of funds not only through global, but also Russian funds. “Maintaining high global liquidity, combined with low interest rates, can support markets, especially against the backdrop of expectations of a slowdown in the global economy,” notes Vladimir Vedeneev. At the same time, global trade wars remain key risks to markets, whose prospects will depend on negotiations between the United States and China. “If the trade negotiations of the two largest economies in the world fail, and the United States will once again raise duties on goods imported from China, this will serve as a clear reason for sales on global stock markets. Especially since the deadline for freezing the increase in duties is about to expire, and Donald Trump and Xi Jinping are not planning a summit until March 1, ” – notes investment analyst at UFG Wealth Management Evgeny Pundrovsky. Russian assets will traditionally react not only to the global situation, but also to news on potential sanctions, the reason for which can now be the support of the current president of Venezuela and the continuation of the Scripal case. “Any of these themes is easily derived from the“ sleeping ”mode, and the investments that have come will quickly leave the Russian market,” notes Farit Zakirov.