Moscow Times 5 Mar 2012, by Dieter Wermuth
As Russians voted for a new president on Sunday, their country was back in fashion with foreign investors.
The ruble has gained 12.2 percent against the dollar-euro basket since this fall and is not far from its post-2008 crisis high. The rebound of stock prices since the beginning of the year has been an impressive 13.7 percent in ruble terms for the MICEX, and an even more impressive 25.4 percent in dollar terms for the RTS.
Given that the balance-of-trade surplus is running at 12 percent of this winter’s gross domestic product, the strength of the exchange rate looks plausible and will probably continue provided there is no new crash of the oil price and imports do not go through the roof once again. To be sure, neither of these two risks can be ruled out and must therefore be watched closely.
The stock market, valued at a price-to-earnings ratio of 5.9 on the basis of last year’s earnings and at a price-to-book ratio of 1.03, is fundamentally on firmer ground than the exchange rate. But, of course, the stock market is hostage to oil prices.