CNN Money: is it time to buy Russia? Yes indeed

The Russian oil-dependent economy is slipping into recession this year, and there is also the danger that the West may extend sanctions because of Ukraine.

And, nevertheless, the Russian stock market, government currency and bonds all rushed up.

After a terrible year for the ruble, when it depreciated by almost half, the Russian currency has strengthened by about 2015% since the beginning of 4 and is now trading at 58 against the dollar. And this is already something in comparison with the record minimum, to which the ruble fell in December last year, when 80 rubles were given for a dollar.

The chances of the ruble improved somewhat after the recent drop in oil prices stopped. Oil futures have become more resilient, and WTI has traded only a little less than 50 dollars per barrel amid how tense the situation in the Middle East is fueling fears about a reduction in supply.

Hope and Russian bond markets. Yield of 10-year Russian government bonds fell to 11,5% from 13,5% at the beginning of the year. And although the decline in profitability is much more substantial than a year ago, drift is much slower.

“All this is the result of more substantial stabilization in the financial markets,” says Vladimir Kolychev, chief economist at VTB Russia. “It looks like a steady trend.”

Merrill Lynch from the investment Bank of America is also confident in the trend towards the appreciation of Russian bonds.

Merrill Lynch Bank of America analyst David Hauner recently selected ruble government bonds as key in Eastern Europe, the Middle East and Africa. According to Hauner, because of the instability in Ukraine, investors can deprive themselves of the “best deal of the year.”

Also revived and Russian stocks. The MICEX index has grown this year already by more than 14%.

It seems that capital flows also serve as confirmation of the view that investor sentiment is changing. Russian media reports citing EPFR Global reported that, as of the financial market on March 25, the weekly inflow of capital amounted to 6,6 million dollars.

The figure may not seem high enough, but this is a significant increase compared with the previous week, when capital outflows amounted to 57,7 million dollars.

Given that the financial Russian markets are now calmer than in December, the investment climate may again deteriorate rapidly if relations with the United States and Europe deteriorate further, or if oil prices continue to fall - presumably as a result of the lifting of sanctions against Iran.

The truce reached in February between the Ukrainian army and the pro-Russian separatists, remains fragile. The level of violence in problem areas in eastern Ukraine seems to be declining, but the escalation of hostilities may lead to the imposition of additional sanctions.

Andrew Risk, the chief analyst for Russia at GPW’s London-based political risk analysis consulting company, argues that "there is a reasonable high probability of imposing additional sanctions."

New trade restrictions would exacerbate economic problems in Russia. And yet, ignoring Russia as a favorable market for investment would be short-sighted.

“It is still a very big state with potentially very interesting opportunities,” Risk believes. And the political tension between Russia and the West that existed in previous years was not an obstacle to successful investments.