Is Russia a Value Trap?

An investor only needs to hold the Russian equity market for just over six years and it will theoretically pay for itself via the earnings it derives

Cyrique Bourbon 26 July, 2017 | 11:03AM
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In the past three years from 1 July 2014 to 30 June 2017, Russian equities have fallen 17.5% while U.S. equities have increased 31.7%. There are a number of reasons cited for this difference including a 60% drop in oil prices and the application of international sanctions. But beyond the headlines the fundamental developments are encouraging.

Russia is seen by many to be a scary place to invest

Russia is seen by many to be a scary place to invest. Stock market volatility tends to be significantly higher than markets such as the US, leading many people to demand a large discount to account for this perceived instability. This fear-factor is mostly accounted for via lower price multiples.

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About Author

Cyrique Bourbon  is multi-asset portfolio manager for Morningstar Investment Management EMEA

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