In the context of the world’s energy crisis, Russia is emerging as a bright star in the eyes of investors thanks to its position as an oil and gas powerhouse, and also has a fairly healthy financial background.

Rising energy prices are fueling a wave of bets on energy exporting nations, with Russia emerging as a favorite destination for investors.

Since the beginning of the month, the Russian ruble has gained the most among emerging currencies, supported by the prospect of soaring oil revenues. While indices of emerging-market stocks fell sharply, Russian stocks soared.

This marks a major shift for emerging market investors. In recent weeks, many threats have emerged, from the danger of a debt crisis spreading after the Evergrande “debt bomb” in China to the prospect of the US Federal Reserve (Fed) tightening monetary policy. . A series of events have reduced demand for emerging market stocks, bonds and currencies.

But now the thirst for energy has led investors to pay attention to stocks, bonds and currencies of energy exporting countries. The Colombian peso has also skyrocketed, second only to the Russian ruble.

“Energy prices will continue to rise and companies in energy-exporting countries will benefit,” said Ali Akay, chief investment officer at Carrhae Capital.

In the context of the world’s energy crisis, Russia is emerging as a bright star in the eyes of investors thanks to its position as an oil and gas powerhouse, and also has a fairly healthy financial background. The world’s largest energy exporter has more than $600 billion in foreign exchange reserves, a relatively low debt ratio, and is not afraid to raise interest rates to curb inflation.

Profit forecasts for Russian energy companies listed on the Moscow Stock Exchange have increased by 15% since June. During the same period, the profit forecast for energy companies in Saudi Arabia increased only 6.7%, that of Asian energy companies was flat and that of energy companies in Latin America even decreased slightly.

Compared to the whole market, energy stocks in emerging markets are also about a third cheaper despite the recent strong increase. So the potential is huge.

In the third quarter, money managers like Carrhae Capital shifted some of their cash inflows from Chinese tech stocks to Russian energy stocks. Wells Fargo’s wealth management fund also diverted investments from China to Russia. JPMorgan added to its portfolio of Russian stocks, betting between now and the end of the year that stocks related to oil and commodities will continue to appreciate.

“A rise in oil prices will help increase profits and increase the dividends that investors receive from energy stocks. Moreover, the appreciation of the ruble also benefits the Russian stock market,” said JPMorgan’s team of experts. identify.

In Asia, Indonesia is the biggest beneficiary of the energy rush. Last week, the capital flow that foreign investors poured into the Indonesian stock market increased the most since May 2020. Rupiah is also the strongest performer in Asia so far this month.

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