The Wall Street Journal lays out the risks Russia faces over the long term.
Investors seem fine with the victory of President Vladimir Putin’s political party, United Russia, in elections for the Russian Parliament this weekend.
But Russia has been a big winner all year for those who bought the country’s beaten down stocks, bonds and currency.
The year’s gains, and Monday’s, have a lot to do with oil. The price of Brent crude, the international benchmark, is up 1.73% on Monday and over 25% this year-to-date.
“Russia is looking pretty good to us, just in terms of their ability to repay their debts,” said Paul McNamara, investment director and lead on emerging market bond strategies at GAM, an asset management firm. “Conditional on the oil price being stable, and no more fiscal or monetary tightening, you should see growth start to pick up quite smartly from here.”
“The economy has certainly certainly improved,” said Bryan Carter, head of emerging market fixed income at BNP Paribas Investment Partners. “But ultimately, you’re talking about a country that’s very dependent on one commodity, with a shrinking population and a shrinking labor force.”