If you have not already, it is probably time to sell Russian stocks. Sanctions on the Russian Federation combined with the lower price of oil are hurting the Russian economy and Russian stocks that are not already in trouble soon will be. Before looking at our list of Russian stocks to sell let us look at a few basics of what is going on with Russian and just why, in general, it is time to sell Russian stocks.
Banks and Reserves
Russia has borrowed heavily in order to develop its economy. Banks have borrowed from the West to lend in Russia. Estimates of $192 billion in for foreign debts are probably accurate. And, Russian banks do not have the reserves to pay off their debts. The Ruble has fallen from 3.2 cents to the Ruble to 2.6 cents since a year ago. Thus there is diminishing hope that Russian banks will be able to exchange a falling Ruble for enough dollars or Euros to pay their debts. Russian foreign currency reserves have fallen from 480 billion down to 409 billion in the last year and in order to prop up the Ruble Russia needs to sell more.
Crimea, Ukraine and Sanctions
President Putin wants Ukraine, the largest country totally in Europe to be in its sphere of influence and when street protests resulted in the overthrow of a pro-Russian and corrupt leader, Russia promptly annex Crimea and supported rebels in the east and south of Ukraine by sending men and material. The response of the West has been to place sanctions on Russia. Investors are leaving and the Russian central bank expects to see more than a billion in capital leave the country in the next year.
A Weak Ruble Means Inflation
The Russian central bank expects to see eight percent inflation in the next year. As things get more expensive people tend to save their money and the economy suffers. Companies selling to Russian consumers will be hurting.
President Putin and the Worst Thing That Ever Happened to Russia
The Russian president firmly believes that the worst thing to ever happen to Russia was the breakup of the old Soviet Union. This is a man who is surely aware of the thirty million war dead in their struggle against Nazi Germany in World War II. The problem is that his argument that all current problems in Russia are caused by outsiders plays well to many Russians. So, it will be difficult for the Russian leader to back off of his aggressive stance, give back Crimea to Ukraine and quit sending tanks into Ukraine. That being the case we can only expect things to get worse. On top of that the USA is in the midst of an oil boom and the Saudis are producing more and not less. Russia is not going to be able to bail itself out by selling oil and natural gas. When trading foreign stocks you typically want to look at ADRs. Take a look at what Russian stocks sell as ADRs and avoid them or make an informed decision as to when to sell Russian stocks.
Oil Companies
Here is a list of Russian oil and gas companies that will likely be hurt by the combination of low prices and Western sanctions. Take a look at our old article, how to trade oil stocks and then sell Russian stocks in the oil markets.
- Gasprom
- Gasprom Neft
- Lukoil
- Surgutneftegas
Mining, Metals and Industry
Russia is rich in natural resources but mining and extracting minerals or setting up factors to produce products require financing which is a problem with western sanctions. Here are a few Russian companies where you might want to sell if you already have not.
- MecholOAO
- Buryatzoloto
- Polymetal International
- Polyus Gold
- Polyus Gold International
- Seversky Tube Works
- TMK
Banks
And here are a couple of banks to avoid or sell.
- Bank Vozrozhdeniye
- Sberbank of Russia
If you are going to avoid or sell Russian stocks watch the news as any or all of these could recover if Russia quits trying to bully its neighbors and western sanctions ease. Technical analysis is still the key. Anyone who makes money is a good buy and anyone who stands to lose as the Russian economy declines is where you should sell Russian stocks.
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