Russia: Should you invest as tensions ease?
Recent events in Russia might seem to have highlighted the risks of investing in the country – yet the rouble and the MICEX, Russia's main stock market, have had one of their best weeks for months.
Is this renewed optimism justified?
Planned trade talks between Russian President Vladimir Putin, his Ukrainian counterpart Petro Poroshenko and José Manuel Barroso, President of the European Commission, were announced late last night and are expected to start soon. Meanwhile, Putin sounded a much more conciliatory tone towards the West in comments Thursday night.
The dispute over Russian convoys crossing the Ukrainian border, ostensibly with aid for residents of eastern Ukraine, also appeared closer to a resolution Friday, as Ukrainian troops inspected the trucks.
Resolution in sight?
Many in Russia are now hoping that the situation can now be resolved without further sanctions against the country's businessmen and individuals. Meanwhile, many of Russia's big trading partners, particularly Germany, are also hoping that there'll be no more damage to their economies.
"Russia's actions are helping focus minds on the economic cost on both sides," Alexander Branis, chief investment advisor at Russia-focused fund Prosperity Capital Management, told CNBC.
He also pointed out Putin's popularity with Russians.
"Russians can withstand a few quarters of zero economic growth," Branis argued.
Winter to see a thaw in relations?
The impasse over Ukraine is the biggest impediment to investment at the moment, but Branis was optimistic that it could be resolved.
"In a few months, the issue of gas supply will come up. This will need to be solved before winter comes," he pointed out.
Ukraine is dependent on Russia for much of its energy supply, and the conflict has arguably gone on longer because of the less energy-intensive summer months. Poroshenko may have to reach agreement with Putin to keep his people warm, this argument goes.
Saber-rattling
However, the government led by Petroshenko has just voted through new sanctions which mean it is able to halt transports of Russian gas through the country.
And there are several reports of tanks with Russian markings crossing the Ukrainian border – an action which may trigger further Western sanctions.
The Kremlin may seem closer to a rapprochement with the West, but that has been the case before in this conflict.
- By CNBC's Catherine Boyle