Some investors fear struggling Russia may go bankrupt. Money management monolith BlackRock isn’t one of them.
“A lot of things were priced for bankruptcy,” Plamen Monovski, BlackRock’s emerging-markets money manager, tells Bloomberg News.
“All you need in Russia is a rally in commodity prices, and the outlook for the economy changes pretty quickly.”
Russia represents the main overweight holding in BlackRock’s emerging-market funds, he says.
BlackRock’s purchases include banks and commodity producers.
Russia’s RTS Index plunged 80 percent from an all-time high in May 2008 to its January 2009 low. It has since rebounded about 58 percent.
Russia is falling into its first recession in 10 years, as companies struggle to repay $147 billion of foreign debt this year, and corruption remains endemic.
BlackRock isn’t alone in buying Russia.
“Russian stocks are still of good value,” Mark Mobius of Templeton Asset Management tells Bloomberg.
“They have risen dramatically from their low point, but they are still a long way from their previous high.”
Rising oil prices could help Russian stocks too. “Russia is largely a call on whether you’re positive on energy or not,” Hugh Hunter of Blackfriars Asset Management tells Bloomberg. His firm is overweight in Russian shares.
To be sure, some experts are more pessimistic, noting that Russia’s economic turmoil already has sparked street protests.
“The social unrest will spread. There’s not much the government can do about that,” Georgetown University Russia specialist Harley Balzer tells Moneynews.com.
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