The Chicago Journal

Russian ETF Skyrockets as a Few Spot Bargains in ‘Uninvestable’ Market

Photo by Kanchanara

As the Ukraine-Russia crisis continues, many industries have been affected by the sanctions set by the United States and its allies. As a result, the Russian market is at a distressed level. 

On Thursday, a Russian-exposed ETF momentarily soared by over 100% in London, indicating that a few investors spotted the latest turmoil levels as a prospectively non-expensive approach for Russian assets. However, the Ukraine-Russia conflict continues to escalate. 

Exchange-traded funds (ETFs) are among a few ways left to obtain exposure to Russia amid Western sanctions against Moscow for its attack on Ukraine, as they carry on with trading even if liquidity in the underlying asset plummets. However, this makes it hard to determine the exact value. 

According to Schroder CEO Peter Harrison, the Russian exchange has been shut down for four days, and stocks and bonds are currently “in the realms of utterly uninvestable.”

Schroders has unsettled sell orders on the Russian market, among other asset handlers. 

Although several investors have not nudged Moscow securities, shares in BlackRock’s iShares MSCI Russia ADR/GDR ETF, which records depositary receipts of Russian companies such as Sberbank and Gazprom, concluded with a profit of 21%, following an all-time low on Wednesday. Previously, they had gained more than 100%. 

Nonetheless, the ETF’s price remains to drop by over 80% this year, and volatility is expected to stay high until a potential solution to the conflict is indicated. A new attempt for peace negotiations on Thursday brings hope to some. 

A Securequity sales trader, Jawaid Afsar, said, “The bounce reflects both bargain hunting and also potential belief that some resolution may be in sight.” 

The iShare ETF has momentarily halted the making of new shares, which aligns with a similar move other exchange-traded funds exposed to Russia did; the London Stock Exchange and Deutsche Boerse, on the other hand, have held trading in numerous depositary receipts.