Soaring energy prices have forced global investors to turn their attention to exporters from emerging nations, with Russia becoming their top pick for investment.
Rising oil and gas prices have helped the Russian currency, the ruble, reach its strongest level against the euro and the US dollar in more than a year, while pushing Russian stocks to record highs. In September, it was the only emerging market currency to gain against the US dollar.
Buoyed by higher oil revenues, the ruble kept gaining more than any other emerging-market currency this month. Meanwhile, Russia's stocks outperformed the stocks of other developing nations as a broad range of developing equities declined.
Other factors that make Russia an attractive investment include the country's $600 billion in reserves, along with a low debt burden. Moreover, the Bank of Russia has been pursuing a tough monetary policy, pushing hard with rate hikes to take rising inflation under control.
The local currency value of the nation's oil exports was reportedly hovering around a record 6,000 rubles per barrel of Brent as of Monday morning.
London-based hedge fund Carrhae Capital has shifted some of the investments from Chinese technology stocks to Russian energy companies in the third quarter, while Wells Fargo Asset Management also moved its funds from China to Russia, Bloomberg reports.
JPMorgan Chase added to its position on the Russian Depositary Index as it remains bullish on commodities and oil-related bets this year, according to strategists led by London-based Davide Silvestrini, as quoted by the agency.
"Higher oil prices will drive higher earnings and dividends in the energy stocks which account for 59% of the index, and drive a stronger ruble which in turn drives the domestic stocks, another 25% of the index," the analysts said.
"As such, it is fundamentally perfectly suited as an equity vehicle for our bullish call on commodities, and oil in particular."
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