Western traders eyeing Russia after Trump win – FT

Russian assets have become the main topic of discussion among Western traders after Donald Trump secured victory in the US presidential election, the Financial Times reported on Thursday, citing market insiders.

According to the report, Trump’s repeated pledges to end the Ukraine conflict are seen as a sign that Western sanctions placed on Moscow could soon be lifted, making Russian stocks and the ruble a lucrative investment.

Trump secured victory over his Democratic opponent Kamala Harris with 296 electoral college votes, surpassing the 270 required for a win. The president-elect had repeatedly said throughout his election campaign that he could end the Ukraine conflict within 24 hours upon returning to the White House. While his actual return will happen upon his inauguration in 10 weeks, the Russian stock market reacted to the news of Trump’s victory with what analysts dubbed a “Trump rally,” with the stocks of all major Russian companies soaring. According to the FT, the situation has not gone unnoticed by Western traders.

“All the talk this morning is about how to trade Russia and whether sanctions will be thrown off,” a US-based portfolio manager, who asked not to be named, told the news outlet.

“[Traders at Western banks] are questioning suddenly whether the ruble is now tradeable,” he added, noting that some Western banks still trade the ruble offshore via non-deliverable forwards despite sanctions.

The ‘Trump rally’ saw the ruble-denominated Moscow Exchange (MOEX) index surge by 3.6%, recording its largest intraday jump since August. Russian energy majors Gazprom and Novatek both jumped nearly 5%. The stocks of Lukoil and Rosneft also rallied, along with Yandex, Norilsk Nickel, Sber, Alrosa and Aeroflot. The rally spilled over to Russia-linked stocks elsewhere. Austria’s Raiffeisen Bank International, the largest Western bank still operating in Russia, became the second-best performer on Europe’s Stoxx 600 index on Wednesday, having gained 8%.

Russian experts said the markets had rallied amid investors’ hopes that Trump’s win would be a positive development for Russia and help de-escalate geopolitical tensions.

“This is what [Russian investors] have been waiting for, because the stock market and war are not very compatible, and doubtless any sign of a possible end to war is interpreted by investors in a very positive way,” Sergey Romanchuk, former head of trading at Russia’s Metallinvestbank, told the FT.

“There are cautious expectations of changes, speculation that on the ‘Trump effect’ the stock markets may again rush upward. Trump’s victory means... a reduction in the geopolitical risk premium,” Mikhail Zeltser, an expert at BCS World of Investments, told RBK.

Most analysts, however, warned investors to be cautious, as Trump’s victory may pose new risks for Russia. For instance, they noted that the easing of US sanctions on the country is not a given, as Trump has not commented on them yet.