Industry Updates

Investors pile into Russia ETF amid coronavirus sell-off

Tom Eckett

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Investors are looking to take advantage of the recent sell-off in the Russian stock market amid predictions the coronavirus impact will remain short-term.

According to data from Ultumus, the HSBC MSCI Russia Capped UCITS ETF (HRUD) saw inflows of $47.4m, in the week to 21 February, among the highest for ETFs listed in Europe, taking its total assets under management (AUM) to $206m.

The inflows come after a month-long sell-off in Russian equities amid concerns the coronavirus could have a long-term impact on Chinese markets, a nation Russia is closely tied to, and the price of oil.

Coronavirus: Emerging market ETFs to only suffer short-term

Analysts have been concerned the outbreak could impact demand for oil. At the start of the year, Brent Crude was trading at $68 a barrel, however, it has dropped to lows of $53 a barrel on 10 February.

In a research note, Ned Davis Research warned the coronavirus is a “true black swan” event the oil and energy markets.

The RTS index of leading Russian stocks has fallen 7.4% since its year-to-date high of 1,647 points on 20 January. The energy sector accounts for 55.8% of the MSCI Russia index.

Russia has been one of the standout emerging markets over the past year with the MSCI Russian index delivering returns of 27.3% over the year to 31 January versus 1.72% for the wider MSCI Emerging Markets index.

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