Rhunzzz

Demographics Make Russia a Risky Long-Term Investment

All other things being equal, a greying population means a population in which more people are trying to liquidate assets (for retirement income) than are trying to accumulate them (saving while working). This means asset deflation. That is why developed countries with greying populations try to offset this by encouraging immigration.

Russia is, however, not a very attractive place to emigrate to. Its image overseas is a violent place punctuated by political murders, rampant neo-nazi movements, Chechen terrorist attacks, heavy-handed state retaliation (Beslan and the Moscow Theater siege come to mind). Meanwhile, the Russian government will not countenance an immigrant-friendly policy either, for reasons unclear (though one can suspect).

Meanwhile, property is not secure in Russia. Look at how the Russian state screws foreign investors over when things are good, the very same foreign investors that it held out the begging bowl for when times were rough. To a foreign investor, Russia is governed by rapacious, kleptocratic ingrates.

If I could buy an emerging markets ETF or index fund that excluded Russia, I would. But I can't, no more than I can buy a developed world ETF that excludes Japan.