Even at the worst of the softness around Christmas, the Russian market retained its technical poise and now seems to be racing ahead after the new year break.
On December 27, the Micex slid to a low of 1,663 — touching the 20-day moving average but then bouncing well off that support line.
This demonstration of respect for the technical situation shows us that Russian stocks are still aimed at the upside, and in fact they are up 5% from the bottom of that December dip and a spectacular 27% from September 1.
If that does not tell you the world has gotten more comfortable with the reallocation trade into formerly underweight Moscow, I do not know what will.
From here, the ruble still looks undervalued on a fundamental basis as commodity prices and manufacturing activity trickle down to drive consumer spending and the discretionary group.
Consumer, commodity, infrastructure: For Russia these days, almost everything might be good, as long as it has the ruble behind it.
Good for the Market Vectors Russia ETF (NYSE:RSX) and SPDR S&P Russia ETF (NYSE:RBL), not to mention the ruble fund – CurrencyShares Russian Ruble ETF (NYSE:XRU) and, in theory, the usual suspects among the ADRs.
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.