Russia needs change to spur gains

Article Excerpt

Russia has a huge economy, considerable natural resources, especially oil and gas, and a large labour force. Its emergence from communist rule in 1990 and the large-scale privatization of government-owned entities raised hopes that it would become one of the top-performing emerging economies. Despite the strong performance of Russian between 1996 and 2008, it has faltered over the past decade. A recent report by the McKinsey Global Institute ranked its economic performance in the same group as countries such as Zimbabwe and Venezuela. Investment risks are easy to spot—a commodity-dependent economy, episodes of currency volatility, government corruption concerns and punishing sanctions applied by the U.S. and Europe. But these risks are well-known and are likely reflected in today’s low stock prices. Consequently, the top holdings in the VanEck Vectors Russia ETF portfolio now offer low price/earnings ratios and high dividend yields. yields…

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