For Russian traders, the election of Donald Trump has been greeted as a mixed bag — it's been great news for stock prices and for the ruble currency, but it could spell harm for Russia's economic prospects over the longer term.
The outspoken Republican's victory has led many in the United States to assume that, based on Trump's warm comments about President Vladimir Putin during the campaign, relations between the two nations will improve. The theory goes that with Trump in the White House, sanctions put in place in 2014 after Moscow's aggression toward Ukraine will be eased, and that the nomination of Rex Tillerson as secretary of state will benefit a country that in 2013 gave the Exxon Mobil Corp chief executive its Order of Friendship award.
Russian traders in recent weeks, however, have a more nuanced view of how Trump may impact the investment climate in Russia, an outlook that is overwhelming positive now but could soon darken economic prospects for Moscow.
First, the good news.
Russia stocks, like their U.S. counterparts, have soared since Trump's election. The year-to-date chart of the MICEX Index — tracking the performance in local currency of the 50 largest Russian companies listed on the Moscow Exchange — is up 12.9 percent since the election.
That's the strongest domestic stock gain globally since Nov. 9 and takes the index's gains to 24.3 percent since the start of the year. Gains are even more pronounced on the RTS Index, a capitalization-weighted index of 50 Russian stocks denominated in the U.S. dollars. which has been boosted even further by the strengthening ruble. The RTS has gained 18.4 percent since the U.S. election and 50.4 percent since the start of the year.