Hermes: Consider Russia for Income But Not Long Term Growth

Russia stock market is up 35% year to date thanks to the recovery of oil price, however investors should consider Russia equities for income but not for long term growth

Karen Kwok 26 October, 2016 | 5:05PM
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Russia stocks offer attractive dividends that could be a sustainable source of income for UK investors, according to Gary Greenberg, head of emerging markets for Hermes. However, investors looking for growth should steer clear, as the market offers low profitability and capital could be at risk.

“It is appropriate and sensible for Russia companies to pay high dividends as they do not have particular great capital expenditure projects,” Greenberg told Morningstar this week. “But I do not have an overweight position in Russia because it remains too government controlled, and there is always potential for war in the region.”

Hugo Bain, senior investment manager at Pictet Asset Management said that dividend yields of Russian stocks are extremely attractive relative to the US market. While the Moscow Exchange MICEX index offers a dividend yield of 5.8%, S&P 500 offers just 2%.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Federated Hermes Glb Em Mkts R EUR Acc5.47 EUR0.13Rating
JPM Russia C (acc) USD9.95 USD1.28Rating
Neuberger Berman EM DbtHrdCcy EUR A C12.41 EUR0.43Rating
Pictet - Emerging Europe R EUR  
Rosneft Oil Co GDR8.86 USD0.00

About Author

Karen Kwok

Karen Kwok  is a Reporter for