Russian ETFs hit record trading lows as they plunge further

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It looks like a race to the bottom as Russian exchange traded funds continue to sink to new record trading lows on Wednesday morning. The VanEck Vectors Russia ETF (BATS:RSX) is down another 13.8% after it closed -23.8% on Tuesday and -30.4% on Monday.

RSX touched 7.02 a share, its lowest price ever. Outside of RSX, the Direxion Daily Russia Bull 2X Shares (NYSEARCA:RUSL) has also touched a record low as the leveraged ETF is -25.3% today, trading at 2.80 a share.

Moreover, the iShares MSCI Russia ETF (NYSEARCA:ERUS) finds itself down another 12.8% today, and the Franklin FTSE Russia ETF (NYSEARCA:FLRU) is -7.8% this morning. Both ERUS and FLRU are sitting at fresh all-time trading lows.

The VanEck Vectors Russia Small-Cap ETF (BATS:RSXJ) is at 18.96 a share today, down 4%, and is the only ETF that hasn't touched a record low.

Russian-based ETFs continue to crumble as military action has amplified, and Ukrainian president Volodymyr Zelenskyy said that the Russian authority intends to "erase our history, erase our country, erase us all."

The invasion of Ukraine by Vladimir Putin and Russia has sent ETFs into a tailspin. Since the start of the invasion on Feb. 24th RSX is -56.5%, RSXJ is -29.5%, RUSL -71.3%, ERUS -59.2%, and FLRU is -38.8%.

With tensions ratcheting up and sanctions being imposed on Russia, it has squeezed Russian stocks and ETFs. Tuesday evening, President Biden said at his first State of the Union address that Vladimir Putin will have to "pay a price" for Russia's invasion into Ukraine and that the U.S. is closing its airspace to Russian planes.

Comments

[jzup]

Not only Western sanctions on Russia, Putin also counters with banning to pay foreign debt or sth. If you can open a account in Russian exchange and directly trade there, it might make sense to buy some depth value because likely at least their oil business/gas will survive. But I am not sure about these ADRs in US because Putin could invalidate foreign ownership. If I have them, I probably will hold on some and see because 1)they already lost majority of value 2)tax loss season is still 7/8 month away. But if I do not, I will walk away because this is really out of my 5 cents.

[Austin Craig]

Sold my RSX. Bad call on it.

Keeping sberbank and gazprom.

[Pompano Frog]

@Austin Craig

I too made a short term bad call. But, we went through this with oil, where if you bought a 3% position at $30 and then had to buy another 3% at $20 and then another 3% at $12, you ended up with a position in long term value.

I made a 2% initial position in RSX and then hit it again on a 40% drop and then I need to go in again under $5.

I still don't believe that China can afford to allow the Russian equity markets or economy to falter. It has too many implications for them. They may be letting this panic run so their state controlled financial institutions can pick up the pieces at pennies.

The most important facet of Chinese economic policy is to keep the undervalued Yuan. That means lending and investing massive sums offshore in order to offset the trade imbalance.

We will see in a week. The buying could come only from the Russian Central Bank or Chinese institutional investors.

I hope we are truly supplying weapons systems to Ukraine which will allow them to clear the skies. You never know what our politicians are really doing.

Meanwhile, Russia will get supplies from China and export raw materials in return.

RSX 5.79, S&P 4363

Normalized p/e RSX, under 2x: S&P 21.5x

[Austin Craig]

@Pompano Frog Russia will have this wrapped up in a bit.

www.youtube.com/...

Pretty good stuff around the 30 min mark. In fact.. the entire interview is good.

[Shaduc]

@Pompano Frog thx for the direction.

so now i return to focus on buying babaf or baba calls or some other shares.
I will bring this up.
tomorrow Fidelity talks about this:

Continuing the Conversation: Russia and Ukraine

Friday, March 4
12:00PM–12:45PM EST

[gutcheck]

are majority of rsx , erus assets owned by russians/ogarchs or by international investors ?

[ElPablo224]

ERUS is dissolving as a fund…

[SeattliteTrader]

Still not sure why such a large dislocation in the price to NAV for $RSX. As of yesterday's close (3/2), NAV was $1.29 and the recorded trade price at close was $7.19, a PREMIUM of over 450%. OUCH

[oakraid]

@SeattliteTrader Some may be thinking this thing is going to move toward a resolution in the near future, and trying to value RSX based on that point, and how long the road / what path to recovery.

[SeattliteTrader]

@oakraid ...Sberbank is valued at $0 in London. It's been wiped out. The sanctions that have been levied by the West have essentially crippled Russia's economy. My guess is $RSX is nearly worthless after the smoke clears. Putin seems insistent on continuing to bombard Ukraine, so...

[oakraid]

@SeattliteTrader we'll see. I have no idea how this is going to play out.

[InvestorMan Sr.]

Noted ex-Soros partner and Quantum Fund investor Jimmy Rogers had touted Russian shares for years. He lives in Singapore now. Still wears bowties, I think.

Anybody seen or heard anything he has to say about all this?

In the past, he would say, buy Russian stocks. They're on sale. I wonder he thinks now.

[Mission-implausible]

@InvestorMan Sr. The Wealthion YouTube channel has hosted him from time to time. With MSCI purging the EM indexes of their Russian holdings, and FTSE likely to follow, he would probably say they're currently out of favor.

[Mokajoka]

Bad news for the Russian bots on this board. Got email from Schwab today saying Schwab will no longer allow account holders to trade any Russian stocks through them. Must be a uniform policy all US brokers at this point. So you bots out there - give it all a rest - it’s game over - your sales pitches are useless as no one can act on them - the curtain has fallen - the fat lady has sung - so all of you can now take the rest of putins tenure off and start to hit the vodka !

[The_Hammer]

@Mokajoka It's so sad the way our govt did nothing to hold the CCP and people responsible for the manmade covid virus released on the world.

[ThaDoc]

@Mokajoka They won’t let the little guy have a chance at making a buck.

[okeeffej]

@Mokajoka I can't believe you would say something so horrible. Putin is far from a good guy, but most of the world depends on Russian oil and gas. Do you think the average Russian guy working at LUK, is in love with Putin? No, he is a working guy. I don't want to be judged by our bombing of Egypt, Iraq, Syria, and others by Clinton, Bush, Obama, and Biden.

[The_Hammer]

revised RSX NAV $3.0292
3/2/22

[ThaDoc]

@The_Hammer How’s that possible with the Russian market closed?

[rjd0308]

@ThaDoc It is based on the price for the russian securities trading on other exchanges. You won't know the real NAV until the russian exchange opens again. The way I see it, it could go to zero, or it could go to 15. If you have a long term view, I think it will recover. If a peace deal is brokered or agreed between the 2 sides, it will recover sooner. Europe can't survive without Russian gas and oil, I don't see them cutting their own throat by escalating the sanctions.

[The_Hammer]

@ThaDoc London or US is not closed either are currencies. This fund holds mostly adrs from London exchange and US. This was official nav from Van Eck.

[Keops]

Having fun ukraine style:

"Ukrainian anti-corruption authorities: No need to declare captured Russian tanks, equipment as income. The National Agency for the Protection against Corruption has stated that captured Russian tanks and equipment do not need to be declared to tax authorities. This is because the value of this “crap” does not exceed 100 living wages, the agency joked. On a serious note, it said that war trophies are untaxable."

[okeeffej]

@Keops I read that as well, and was shocked! If you left a basketball in my yard for example. What business is it of the government if I keep it? Diamond ring, rifle, etc. You know my point. Ukraine is very corrupt. The news is making this comedian into St Patrick-ov. He is as corrupt as all the politicians and more.

[Clark158f1]

WE should delist them all !!!

[Moomoo22u2]

Putin now has killed 2000 Ukrainians. Trading these Russian names is blood money.

[Keops]

@Moomoo22u2

wounded 10 000 (?)

[ThaDoc]

@Moomoo22u2 We killed a bunch of Iraqis in desert storm….. are you gonna sell your stock in AMZN?

[cjs420]

@Moomoo22u2 all money is blood money get over it.

[Austin Craig]

Buying RSX, Gazprom, sberbank.

[Mr Briggens]

@Austin Craig

I hope you lose everything.

Will you keep buying after Putin declares martial law in Russia?

[Austin Craig]

@Mr Briggens Why ever would I stop? I've traded Gazprom for over a decade. Great stock.

RSX= risky but good exposure.

Sberbank = crazy profit margins but obviously those are going to get ripped up. it will be a loss or a massive gain.

[vicwinkler]

@Austin Craig
That is an immoral trade. You are sharing in the blood being shed by your funding of those companies.

[Clairvoyant Investor]

Bought 2000 shares of $ERUS at $9.16 this morning and sold into the uptrend at $12.77. Russian ETFs are trading vehicles for traders who know what they're doing. Holding overnight is not what you do in this kind of situation. Strictly a day trade.

[okeeffej]

@Clairvoyant Investor May I ask please? I'm more a dividend guy, but I picked up some SRX, and ERUS yesterday. ( same ballpark as you on $). I was thinking about holding until the "war" is over. In my opinion it will be like the Cov, and they will shut it off like a switch when the money is made. These ETF's have big players in the holding. Do you think I am safe to hold long? (like a year)Germany is going to OK the pipeline. Thanks for any tips on this. I'm not an ETF guy, or out of the box investor normally.
Long: MO, JNJ, O, PG, RYLD, ABBV, LAND, MMM, HD.

[jzup]

I am quite confused regarding to which Russian assets American are allowed to buy or not. On the news, it seems their oil/gas is still allowed in US so I assume maybe their oil/gas company stock is not banned?

[Austin Craig]

@jzup You can legally buy anything your broker will let you. Granted you might get trapped in it for some time.

This situation will get resolved w/ time one way or the other. I'm content to buy and hold.

[PC49]

@Austin Craig Some are claiming ETF's such as RSX can go to zero, is that true?
One guy wrote this to me:

'Russia Bans Coupon Payment to Foreigners on $29 Billion in Bonds' This is from 2 hours ago.

www.bloomberg.com/...

Throw this on the already huge pile of political risk for buying anything with 'Russia' in its assets. Russia could essentially nationalize all the companies / commodities that are traded within ETFs, prevent any payments, etc. There is also simple delisting. You 'own' it - but can't trade it.

What do you say?

[mrjustice]

@PC49 ETFs can be shut down/liquidated for many reasons. Usually it's because too few investors want to own it. RSX might be one now. Go to the Van Eck Vectors website and see what they're saying.

[Value Investment Club]

Burn baby burn. Drive Russian stocks to zero. I want so much chaos in Russia that the people rise up and rip Putin's Russia to shreds. When the people start fighting back with force, we will see the end of the regime.

[upwardmo]

@Value Investment Club In Russia these stocks will be trading normally, on their valuations. Companies like Lukoil, Gazprom and Phosagro are reporting record profits -- and paying huge dividends. Russian investors will actually receive those dividends. So it's just international investors who are getting screwed by the shenanigans of the brokerages.

[Keops]

@Value Investment Club

Agree!

The good russians will have to accept it, embrace it. When russians
get their shit together, those that bravely protested against the tyrants will be handsomely rewarded. Material for top positions, in the new normal, Russia, part of the free world.

I can not see any other way. In fact, in my tiny country, part of the
EU, some ex-ministers, current politicians are suggesting this. But,
as always the left-wing replies "racism" "discrimination" et.c.

[Keops]

@upwardmo

Let me suggest, this is beyond fundamental or any other sort of
analysis. Just terminate contact / communication with all russians, russian investments til they sort their own problems out. Be a good investor, do not support evil murderous dictators.

Then, let the party begin. Will be the investment of the century.

[Tellurium128]

These funds are the worst investments if you wanted exposure to Russia.
I don't understand how the ETF can still trade when the underlying stocks can not! Do investors in these fund not realize that the fund is Naked (meaning that the ETFs are not actually adding to or disposing of their actual Russian portfolio) and the NAV prices are total fiction?

[DumpyD]

@Tellurium128 in that case, how do they pay the dividend?

[Austin Craig]

@Tellurium128 You can still trade Russian stocks. I bought Gazprom today. It all depends on your broker.

[pumpstick]

@Austin Craig you can trade an adr with no value.

[Idkmuch]

As I’ve said a thousands times before this , the Russia bulls are naive and stupid. Today only confirms that and they should just index their money cause they are lost when it comes to investing.

[Keops]

@Idkmuch

Agree, and for decades the russian ADR bias made them defend
putinism. Usefull idiots.

Then there is the pure russian trolls, different story.

[Keops]

Today russia cut the VAT 20% to zero, on gold, meaning, everyone still patriotic russians, and their uncles, will buy gold instead of dollars, euros.

[Amstragram]

@Keops great, let’s go back to gold coins in Russia, please offer a visa for all the goldbugs so they can join you in the middle age finance

[Keops]

@Amstragram

No need, they got permanent residency at zerohedge. the US
middle age.

[shorebilly]

@Amstragram Didn't Nixon take us off the gold standard? Middle ages?!

[Sklyazo]

The Russian Federal Reserve Bank equivalent already announced that foreigners will not get dividends to preserve foreign currency reserves and to prop up the Ruble. Also to retaliate for asset seizure in Europe.

This is why so many people believe in owning gold bullion directly because this tragedy just confirmed how useless the ETF structure to protect your investment.

The fact that some Russian mother who can’t buy an iPhone or imported French bread, does not make Biden some hero.

You want peace, then negotiate by listening to all sides. Otherwise, don’t complain about the dying children.

[RunawayBear]

@Sklyazo But Hunter needs his monthly Ukrainian dividend check! His crack pipe won't fill itself, you know!

[Yggsdraggl]

@Sklyazo You don’t negotiate when bombs are falling.

[Yggsdraggl]

@RunawayBear Poor dear. You miss President Pee-Pee Tapes.

[Keops]

they got it coming