Russian Trading System Stock Exchange, aka RTS Stock Exchange. It is the first regulated exchange in Russia upon it’s establishment in 1995. The Stock Exchange now trades variety of financial instruments for the Russian markets that it serves.
Russian Stock Fund
With slow growth, sovereign debt issues and unemployment weighing on the United States and European economies, the stock markets in these regions have demonstrated marked volatility and downside pressure due to the governments needing to enact austerity measures. While the Russian markets do have volatility issues due to the heavy exposure to the energy markets as an oil exporter, Russia exhibits strong economic growth as compared to the Western countries. Russia is considered an emerging market as a member of the BRIC nations. Additionally, the Russian government has been running a net budget surplus and holds the status as a creditor nation.
As with any other investment, there is risk involved with trading in the Russian stock market, known as the Russian Trading System (RTS). Some of the risks involved with all Russian stocks include less transparency as compared to the Western markets, the potential for social unrest despite the government’s efforts to prevent its occurrence, and the dependence of the Russian economy on energy exports. The energy sector is prone to frequent price swings that tend to affect the broader market.
Ways to Access the Russian Stock Market and Minimize Risk
For Americans who want to include Russian stocks in their portfolios, there are US based exchange traded funds (EFT), mutual funds and American Depository Receipts (ADR). It is possible to access these funds through traditional brokerages and these funds have the advantage not being subject to international trading guidelines. The top Russian ETFs and ADRs include the SPDR S&P Russia ETF, which trades on the New York Stock Exchange (NYSE) under the symbol RBL; the Market Vector ETF, which trades on the NYSE; and the ADR Gazprom OAO.
A trader can directly access the RTS through one of the Russian full service brokerages. It is important to attend to the fees and law regarding international trading. The top and largest Russian brokerage house is FINAM.
The Top Russian Sectors and Stocks
The Russian economy is based on exporting commodities, especially in the oil and energy sector, so companies that produce and export these goods tend to be the best performing stocks in the Russian stock market. The following are among the strongest sectors and companies in the Russian stock market:
Oil and Energy: LUKoil, Bashkortostan, Tatneft, Purneftegaz, Gazprom
Steel: Severstal, NTMK, NLMK
Metals: VSMPO, Norilsk
Transportation: Areoflot, Global Trans
Gazprom leads the RTS with Q32011 reported a net increase in profits of 47 percent. Other strong sectors include pulp and paper, agriculture and finance. Citibanks identified two banks as top picks in the Russian finance sector: Sberbank, who quadrupled its profit and Nomosbank.
This article is intended as an overview of the Russian stock market and not to provide investment advice. It is the responsibility of the investor to do their own due diligence in regards to any stocks mentioned in this article.