Home Trading ETFs 3 Growth Drivers For RSX – VanEck Vectors Russia ETF (NYSEARCA:RSX)

3 Growth Drivers For RSX – VanEck Vectors Russia ETF (NYSEARCA:RSX)

by TradingETFs.com
RSX Vs. Ruble - VanEck Vectors Russia ETF (NYSEARCA:RSX)


Instrument

The VanEck Vectors Russia ETF (RSX) is a fund that offers exposure to equities from Russia, which includes publicly-traded companies that are incorporated in Russia or that are incorporated outside of Russia but has at least 50% of their revenues/related assets in Russia.

Driver #1 – Oil

Russian energy companies form 40% of RSX’s portfolio, and they are, in turn, mainly represented by oil companies. Thus, we should talk about them first.

Source: VanEck

Drone strikes forced Saudi Arabia to shut down half of its crude production (roughly 5% of the world’s daily production of crude oil). Under such conditions, oil suppliers from other countries became beneficiaries.

Judging by the current dynamics of the Russian stock market, investors believe that Russian oil companies will be able to increase oil production to make up for the missing volumes from Saudi Arabia.

Moreover, the risk of destabilization in the region leads to the idea that Russia is becoming one of the most reliable oil suppliers to the world market.

Driver #2 – Ruble

RSX is tied to shares of Russian companies that are traded in rubles. Therefore, the value of the Russian currency considerably influences the price of the fund:

Oil is the main export commodity of Russia. And traditionally, an increase in oil price has a positive effect on the value of the ruble because this means an increase in foreign currency inflows to Russia. Thus, the observed increase in oil prices will support the ruble, and this will positively affect the value of RSX.

Driver #3 – De-escalation in Russia-Ukraine standoff

On September 7, the prisoner swap between Ukraine and Russia took place, which inspires hope for the resumption of dialogue between Moscow and Kyev. More than that, the so-called Normandy format talks between Ukraine, Russia, France and Germany may take place at the end of this month.

These events potentially increase the likelihood of lifting at least part of the European sanctions against Russia in the foreseeable future.

Bottom line

I think the balance of risks connected with buying RSX is gradually shifting in favor of the “bulls.” And now one should expect RSX’s price to increase to $25 next month.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.



Source link Google News

Related Articles

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy