Investors are increasingly eyeing Russian assets as potential investment opportunities ahead of Donald Trump’s scheduled call with Vladimir Putin, the Financial Times reported on 17 March.
Hedge funds and brokers are exploring ways to trade Russian bonds and the rouble, betting that sanctions might ease under a potential ceasefire agreement between Russia and Ukraine.
On 18 March, a phone call is scheduled between US President Donald Trump and Russian President Vladimir Putin regarding the end of the war in Ukraine. Before that, Trump’s negotiator Steve Witkoff met with Putin in Moscow, presenting a 30-day ceasefire proposal. Trump called this meeting “very good and productive”.
The US president claimed earlier after a Russian attack and some advances on the battlefield that he would weight significant economic measures against Russia. “Based on the fact that Russia is absolutely ‘pounding’ Ukraine on the battlefield right now, I am strongly considering large-scale banking sanctions and tariffs on Russia until a ceasefire and final settlement agreement on peace is reached,” Trump wrote on his Truth Social platform.
White House spokeswoman Caroline Leavitt said that Trump can impose sanctions “if necessary” on Russia in case the conversation with Putin does not go as he hopes.
“Some of [Trump’s] rhetoric about Russia is erratic, and this is something you have to factor in, but this is about the lifting of sanctions,” Paul McNamara, investment director at GAM, told the FT.
The rouble has surged almost 33% against the dollar this year as markets anticipate a possible end to the three-year war.
Western funds face significant challenges in directly investing in Russian assets due to sanctions. However, some are seeking out previously devalued Russian corporate bonds that are now increasing in value.
“There is definitely some excitement, predominantly in the hedge fund community,” said Roger Mark, fixed-income analyst at investment firm Ninety One.
According to the FT, the international rouble trading volumes have plummeted to barely $50 million weekly, compared to billions of dollars before the war. Some investors have turned to Kazakhstan’s tenge as a proxy for the rouble due to economic ties between the countries.
Banks and brokers are offering alternative investment vehicles that avoid direct exposure to Russia. These non-deliverable forwards (NDFs) allow investors to wager on rouble movements while settling transactions in dollars.
The bank recommended going long on roubles using NDFs last month as US-Russia talks began.
Igor Nartov, emerging markets trader at KNG investment bank, confirmed increased interest in these financial instruments. “It seems to be that you phone up when you want to trade [rouble NDFs] and they will offer you levels and dates,” McNamara added.
The investments carry significant risks. If the US tightens sanctions should Moscow reject ceasefire terms, investors could face losses.
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