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RSX Is An Emerging Market Outperformer

Zoltan Ban profile picture
Zoltan Ban


  • S&P far outperformed emerging market funds YTD. RSX stands out as coming closest to rivaling S&P in terms of performance among major emerging markets.
  • Geopolitical views seem to have had a negative impact on sentiment in regards to Russia's economic evolution over the past few years.
  • The commodities recovery has been a big part of RSX performance, but there has been a failure in recognizing the foundational work that has been done to expand beyond commodities.
  • RSX is set to continue to perform well, not only on the back of strong commodities prices but also because of industrials, retail, and innovation.

Crowd of People Walking Toward Office Building

da-kuk/E+ via Getty Images

Investment thesis: Bloomberg recently remarked on the poor performance of emerging markets, by focusing on the MSCI Emerging Markets ETF (EEM). It singled out a number of poor-performing countries that led to the overall

This article was written by

Zoltan Ban profile picture
My name is Zoltan Ban,  I have a BA in economics. I am a personal investor with over a decade and a half of active trading experience.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RSX, OGZPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (26)

Think. Focus. Health. Wealth profile picture
rsx has the sh*t hit the fan yet?
You were holding RSX shares since $29? Ouch! Have you added more this past week?
News: Germany has gas storage enough for 18 more days.
@Frugal_guy Maybe Europe soon has no gas. But Russia will soon have the first body bags arriving from a bloody brother war that their megalomaniac dictator ordered. I prefer being out of gas, to be bonest.
The Russian central bank has sold all of its USD assets last year. Russia has its own version of SWIFT. I heard that commodities trades can be settled via promissory notes (thus avoid SWIFT but I don't know the details, so take it with a grain of salt, on the other hand, Sri Lanka recently reached a deal with Iran to use tea to pay back oil money owed to Iran for some time). China Russian bilateral trade increased 29.8% YOY for the first nine months of 2021. In sum, the impact of financial sanctions on Russia's long term trajectory is overrated.
Russia is uninvestable due to the Kleptocracy running it and their imperial asperations. Now is not the time to invest in Russia there is way to much Geo political risk. www.etftrends.com/... Besides they really have very little other than oil and Gas and Canadas oil and gas sector has been drive so low that they trade at very low multiples of cash flow and have non of the geopolitical risk.
thank you for your thoughts. Because of such thoughts I am able to collect 10%+ dividend yearly.
A bigger war between Ukraine and Russia seems increasingly likely.

Putin's political security "demands" are ridiculous amd they shouldn't even be discussed. Most probably he is just looking for an excuse to invade Ukraine.

The only one who should give security guarantees to his neighbours is Putin.

My thoughts are with our brave Ukrainian friends that will have to defend their homeland. May god and the Javelins protect them.

For Putin, an independant, democratic, western Ukraine is a no go. He will try hard to destroy it. The right of self determination of countries doesn't exist in his distorted soviet worldview.

The Ukrainian and Russian people will pay a heavy price, with coffins and economic stagnation.

But this war will be the beginning of the end of Putin's totalitarian rule. In the very end, Putin will hang like Mussolini or the war criminals of Nuremberg. Or end in jail like Milosevic.

Putin's rule bases on ethnic Russian fascism and negative emotions against Europe, the US, and NATO. With lies and NATO paranoia he tries to ignite nationalist hate against all of us among the Russian people, and it has worked quite well for him until now.

But one day, the majority of Russian people will recognize that all this blaming is not justified, that they are now a European country, too, and that the Soviet Union ceased to exist already 30 years ago. The people will also understand that all the nationalist hate was only used to cement Putin's rule and exploit them by a cleptocratic elite. And that 20 years of potentially productive transformation of Russia into a modern civil society and a diversified economy have been lost due to Putin's revisionist fascism.

That will be when the nationalist hate Putin ignited will turn against himself.

Certainly not a good idea to buy RSX now.
Has anyone modeled the type and impact of US/EU sanctions on RSX value if Russia invades Ukraine these next few months?
Zoltan Ban profile picture
@DanLoine Thank you for your comment. I addressed the Ukraine crisis in the article. As I pointed out, the sanctions game has been tried before. Russia came out a net winner in the last one, with its agricultural sector having benefited a great deal, not just in terms of food production, but also food processing, fertilizer industry, machinery and so on. Those sanctions were introduced in 2014, just as the price of oil and gas was collapsing. Any sanctions action this time around would happen within the context of the EU short of almost 600 Bcf of gas in storage, which is already dangerously low going into winter. The global oil supply/demand balance is also looking rather precarious starting in the summer of next year, in the absence of another COVID hit to the economy. Russia has the upper hand in my view, therefore I doubt that a severe round of sanctions will be in the cards. If there will be, it will not be sustained for long.

Also, I doubt that there will be a Russian invasion of Ukraine. An invasion makes no sense. At most, the Ethnic Russian rebels may get into a dustup with the Ukrainian army and the Russian army may officially step in, only if absolutely need be.
Russia has been reactive in geopolitics since 1980 (war in Afghanistan). In all these times between then and now, US and UK were very proactive, making Russian empire shrinking to borders of Russia. Not only that. NATO has expanded itself and in some places came to direct contact with Russia, like in Baltics, where German tanks are stationed 160 km from Sankt Petersburg.

Ukraine is important only as a NATO platzdarm for threatening Russia militarily. Unfortunately, very few Ukrainians find this fact disturbing.

The right question would be: Is the new military block AUKUS of US, UK, Australia strong enough politically to escalate military confrontation between European NATO countries and Russia? In other words, can US and UK start another war between European countries?
@Frugal_guy Strange perspective.

You seem to forget that each country has the right to decide on its own future. Also Ukraine, Belarus, the Baltics, and Georgia.

NATO didn't expand eastwards because of the evil US and UK, but because eastern european countries requested it.
Manzanita Research profile picture
Any thoughts on $YNDX? Has sold off even though last earnings were strong.
Zoltan Ban profile picture
@Manzanita Research Thank you for your comment. Russian assets sold off across the board. The oil price pullback is one factor. The other is the Ukraine issue. Gazprom also reported all-time high earnings recently, and it is nevertheless off of recent highs. These are temporary shorter-term issues, as I touched on in the article.
@Zoltan Ban
I think we need to be honest here, and expect tensions between NATO and Russia as long in future, as both will exist as parts of geopolitical setup. For this reason I prefer to have Russian dividend stock with wight of 85% and 10% growth stocks. 5% for Surgut to hedge USD growth.
Mountain Marmot profile picture
@Zoltan Ban
Thoughts on RSX vs ERUS?
Disc; long erus
Extreme Income Plus profile picture
@Zoltan Ban this is a fantastic article; thank for the in-depth research you did.

I didn't know about this ETF; I've been buying FLRU as my proxy for Russia. It's going ex on a pretty large dividend in the next 2 weeks, and I'm excited about its long-term future.

I'll investigate this $RSX too; it's new to me so need to do a bit more DD. Thanks again.

Extreme Income Plus
Great article

I am bullish on russian ag stocks like Rosagro

Any thoughts ? Thanks
Zoltan Ban profile picture
@deblonde Thank you for your comment. I did not look at Rosagro in great detail. But I do like what is happening with the Russian agricultural space in general.
Not to mention that Sberbank is paying a 5.8% dividend and off recent highs. I'll be adding longs here.
PM's Rock profile picture
Great article. I wholeheartedly agree with this assessment and I am long RSX.
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