Going for Gold; How to Invest in Russia

How To Invest In Russia

How To Invest In Russia

With the largest and most promising Australian Winter Olympics Team currently in Sochi, more Australians than ever before have been tuning in to the evening telecasts to get a glimpse not only of our champions, but also what Russia has to offer.

Alongside cheering on Torah Bright on her way to a Silver medal, I got to thinking about the dollars spent in hosting and bringing Russia front and centre on the global stage. In addition, what will be the lasting legacy of what has been the most expensive Olympics ever held?

Yes that’s right; this year’s Games have been flagged as most expensive Olympics ever, reaching a cost of $51 billion US dollars. On a per event basis, this cost blows out to a staggering $520M per event to be held, which easily trumps the $132M per event cost of the Beijing Games.

Some have been quick to blame corruption and backdoor payments for the cost blowout, however when all is said and done, there are two questions we as investors are most interested in…What will be the financial benefit for Russia? And is it investable?

Will Sochi Games benefit Russia beyond 2014?

The Olympics provides a rare and valuable opportunity to showcase and promote a country, in this case Russia, to a broad global audience. History shows that passed successful games such as Sydney and London Olympics, not only benefit their host countries during the games themselves, and during the construction phase prior to the games, but also for many years to come.

Last year the UK Government reported that the London Olympics had provided a $9.9billion trade and investment boost in the first year following their games. This is all part of the UK’s 4 year plan to capitalise on the publicity and facilities provided by the Olympics.

For Russia, there are already plans in place to use the Olympic village/areas for upcoming sporting events such as the 2018 FIFA World Cup, plus having already signed a deal to hold street circuit Formula 1 events from 2014 through to 2020. This directly boosts tourism and attracts new global travellers who normally would not think twice about coming to Russia.

But after having spent a record US $51 Billion on the Games, how long will it take, if at all, for Russia to start to see an economic profit?

How can I trade my view on Russia?

The emergence of ETF’s (Exchange Traded Funds) over the last 10 years or so, have meant accessing markets that would normally be out of reach for the average investor, such as emerging economies and in this case Russia, are now very easy to buy and sell.

In addition to getting access to these markets, liquidity and currency management issues are reduced through the ability to trade a US Dollar based ETF on US Markets. These key attributes have supported the huge surge in interest in trading using ETFs.

Russian Themed ETFs

 

Ticker Code

ETF Name

RBL SPDR S&P Russia ETF
RSX Market Vectors Russia ETF
RUDR VelocityShares Russia Select DR ETF
ERUS iShares MSCI Russia Capped Index Fund
RSXJ Market Vectors Russia Small-Cap ETF
RUSS Direxion Daily Russia Bear 3x Shares
RUSL Direxion Daily Russia Bull 3x Shares

The above list give you an idea of some of the most popular Russian ETF’s available for trading on the US Markets. As you can see, targeted ETF’s like the Small-Cap ETF and the Bear 3x Shares provide very particular exposure, whereas the RBL (SDPR S&P Russia ETF) provides your broad strokes exposure to overall Russian Stocks markets.

If your view on markets is that Russia and its economy will benefit then investing in the RBL or RSX above could be the correct investment vehicle. Alternatively, if your opinion is Russia’s hype will be short lived, and that they have over did it on their Games expenditure, then some exposure to a Bear Fund like the RUSS may be the way to go.

The takeaway here is that no matter what your view or opinion may be on any global issue, the increased product range and scope that ETFs provide, will give you a way to trade it.

Originally from the UK, Andrew has been a market professional for almost 19 years, trading a wide range of global markets and instruments. As a highly regarded industry speaker, he has spoken alongside Sir Richard Branson, Robert Kiyosaki, Anthony Robbins and Tony Blair, empowering many thousands of people, from all over the world, with the skills, techniques and ...
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