As advertised right here, the Russian stock market is now down 10% from its April high and sluggish local interest may leave the market at the mercy of global sentiment.
Trading is light in Moscow during the early May holiday season, and in fact the market will be closed several days between now and May 15.
Now that the once-high-flying Russian market has corrected, it joins China and India — and even, on a longer-term basis, lagging Brazil — in making a fairly steep leg to the down side.
The problem seems to be that traders are simply unwilling to shoulder any real risk in these markets. The minute things start to look like they are slowing, hot money flees. This sets off a chain reaction and soon even slow-moving mutual funds are pulling out.
This is not really a sustainable situation as far as long-term clarity is concerned, and it creates odd situations like this one, where oil — the life blood of the Russian economy — is trading at post-recession highs, but Russian stocks are declining.
As we mentioned, expect more of this over the next few weeks before it gets better. Meanwhile, be wary of Market Vectors Russia ETF (NYSE:RSX) and other broad Moscow ETFs and funds.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.