Timothy Ash is head of emerging market research (excluding Africa) at Standard Bank, says Yes.
As the West continues to shy away from Iran-style sanctions, which would ban secondary trading in debt and equity and thereby lock investors in positions, Russia is still technically investible. But it is a binary call on the country now – and no-one in the market has any idea which way President Putin will turn next or, indeed, where this crisis is going. We have consistently gone from one worst case scenario to the next, and a full blown Russo-Ukraine war cannot be ruled out. If you feel comfortable with investing blind, fine. But other investors will prefer to make more measured decisions and await more clarity. Russia has changed, and investors must alter their perceptions and pricing of Russian risk and assets. It’s less predictable, and more aggressive towards the West – and its underlying growth story was already very weak. Russian assets might look cheap against their peers, but geopolitical risks loom large.
Christopher Granville is managing director of Russia/FSU Research at Trusted Sources, says No.
Russia is obviously less investible as a result of the geopolitical confrontation over Ukraine and the brake on growth caused by US and EU sanctions. And the reduced relative size of Russian markets – combined with less liquidity – will attract lower benchmark investment levels. But none of that makes Russian assets un-investible. Thanks to under-supplied product and service markets, sparse competition and efficiency gains from improving management, there are many Russian companies that are posting strong earnings growth in the teeth of stagflation. Rock-bottom valuations also make for high dividend yields in several cases. Such stocks offer investors an attractively paid option on the major recovery that would follow a settlement in Ukraine. Any such lasting recovery will be preceded by short-term bounces on encouraging developments, such as the ceasefire agreement struck on Friday.