Wednesday, August 12, 2009

Take a look at Russia

Remember when the acronym BRIC had cache? That was before last year when emerging markets tanked even more than American and European indices. However, BRIC is back this year, none more so than Mother Russia.
Russian stocks have been seriously beaten down in the last year. Bad loans, low oil and natural gas prices, plus unemployment have seriously hurt the economy. Now is the time to start sorting through the wreckage. It's up about 60% YTD, but I think that will go higher as I predict commodity prices will firm up by the end of the year. Additionally, Russia is throwing as much money at the problem as possible.

One of the safest, easiest, and best ways to invest in Russia equities is through the Market Vectors Russia ETF (RSX). The ETF is highly weighted towards energy and raw materials. I don't mind that since I still believe in the secular commodities bull. Even if you don't this ETF is cheap. It's trading for 30%under book value, a 0.24 P/S, and a P/CF of 1.41.

Another way that will give you exposure to Russia is the Templeton Russia & Eastern Europe Fund (TRF). It's a closed-end fund with greater geographic diversity and less exposure to commodities. It's primarily (about 31%) invested in telecom. I would stay away from the fund however. It's trading at a huge premium (39%) to it's NAV. Plus the expense ratio is 1.82%, too rich for my blood.

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