Despite a double whammy from international sanctions and the oil price crash, the Russian stock market now offers “the bargain of the century,” Templeton Emerging Markets’ executive chairman Mark Mobius told CNBC.
“Russia is very cheap,” said Mobius. “The problem is the sanctions. Many of us cannot invest because of the sanctions. Once sanctions are released, then the market is going to do very well.”
In 2014, one of the world’s most experienced emerging markets fund managers, Mobius said investors were wrong to flee from Russia because of the Ukrainian crisis. The slump in Russian share prices since the start of the crisis represented a buying opportunity, according to the financial guru.
Mobius was echoed by chief executive of East Capital Karine Hirn who told CNBC “If you look at the Russian economy, the worst is behind us.”
She said Russian consumers had been resilient and kept spending money. “Less than before, but they still keep spending,” Hirn said, adding that East Capital had invested in consumer plays.
This week Credit Suisse raised its outlook on Russia, citing the market valuation, and advised investors to switch into Russian equities. “Undervalued equities are like having money in the pocket,” Anna Vaananen, a money manager at Credit Suisse Asset Management in Zurich told Bloomberg.
Russian stock markets have rebounded in the past few months on the back of higher oil prices and a strengthening Russian currency. That is encouraging investor interest.
The ruble-traded MICEX index climbed above 1,900 points this week, close to its 2008 record before the global financial crisis. The index has gained more than 40 percent since January 2015.
The dollar-denominated RTS index is trading at over 900 points for the first time since November last year.
Russia’s Prime Minister Dmitry Medvedev has said that Russian economy and the financial sector are stable and are attracting foreign investors.