Investors turn to bets to the test of sanctions on Russian obligations and the ruble to bet that the rapprochement of Donald Trump with Vladimir Putin will send a wave of capital rushing into the Russian economy.
The hedge funds and brokers have determined how to exchange Russian assets which have been avoided by the West, but which, according to them, could suddenly rally if the American president relaxes the sanctions within the framework of an agreement to negotiate an cease-fire in the Russian war against Ukraine, said investors and traders.
The ruble jumped almost a third against the dollar this year in the hope of an end of the three -year conflict. But investors say that the market looks beyond a possible decline in sanctions.
“A part of [Trump’s] The rhetoric on Russia is irregular, and this is something you need to take into account, but it is a lifting of sanctions, “said Paul McNamara, director of investments at GAM.
Although it remains very difficult for Western funds to bet directly on Russian assets, some are looking for obligations of Russian companies which were considered almost without value after the invasion of Ukraine in 2022 but which are now marked in the internal assessments of certain investors.
“There is certainly a certain excitement, mainly in the community of hedge funds,” said Roger Mark, a fixed income analyst at the investment company at ninety-one. However, the ruble is still barely negotiated outside Russia and the obligations are mainly prohibited from foreign institutional investors due to sanctions and their own internal rules, he added.
Since 2022, sanctions have prohibited the trade in Russian sovereign debt, and numerous issues of sanctioned companies from the country cannot find banks or intermediaries to treat payments to creditors. Exchanging directly rubles, meanwhile, is very difficult due to sanctions against Russian lenders and the internal rules of Western banks.
International negotiation volumes in Russian currency are barely $ 50 million a week compared to the billions of dollars that changed their hands before the war.
Merchants used Kazakhstan Tenge as an indirect ruble indicator, due to the country’s economic ties with Russia, with volumes reaching $ 100 million at $ 200 million per week. The Tenge joined about 5% compared to the dollar this year.
But these trades are difficult to do.
Ninety years said: “You are talking about a quarter of Kazakhstan liquidity [in rouble trading] – So it’s tiny. It is a function of the sanctions and controls of the Russian capital themselves. »»
Some banks and brokers offer bets on future ruble movements that are settled in dollars rather than in Russian currency, so that investors can avoid direct exposure to the country. These so-called non-deliverable attackers (NDF) are often used to exchange currencies that are difficult to find outside their country of origin, such as those of Nigeria or Egypt.
Luis Costa, global manager of emerging market strategy at Citi, said: “Western banks are obviously linked to sanctions. The non -deliverable striker is an instrument where you do not need to have the Russian currency or assets. »»
The bank recommended that you have long rubles using the tool last month when the United States began to speak with Russia.
“Surely, there is more interest in the NDFS recently and the banks have started to quote more actively,” said Igor Nartov, a merchant of emerging markets at KNG, the investment bank.
“It seems that you call when you want to exchange [rouble NDFs] And they will offer you levels and dates, ”said McNamara de Gam. “”[But] Without Russian institutions in the loop, it is very difficult to do. »»
The international markets for Russian assets were evaporated following the invasion of Ukraine, while the sanctions broke the Russian banks of the global financial and the country underwent a huge capital leak.
The Central Bank of Russia has increased interest rates as import costs jumped and the labor shortages have mounted, especially when the Kremlin began a production program for war production crash.
The trade of the ruble is a bet that this dynamic will reverse, in particular if the Russians who fled the country in the fear of mobilizing come back with economies which they have hidden in Georgia, in Armenia and in other neighboring nations.
Citi’s Costa said: “It allows global investors to express a view of Russian capital flows. This is the emphasis here – the potential for improving capital flows to Russia. »»
Trade still has enormous risks, for example in the event that the United States tightens sanctions if Moscow rejects the conditions of ceasefire. Even if the sanctions are relaxed, Russian investors with money stuck in the country can take advantage of it to get out while many emigrants may not return at all, said the brand of ninety years.
“If you are a Russian who has left a system that has become more and more repressive, and you left because you have been called to fight. . . Are you going to come back to your city to face the ostracism of society? »»
The recent increase in ruble has stimulated the Russian bond assessments that have been blocked in foreign investors’ portfolios after the invasion.
“At this point, you cannot buy much, because those who have the obligations generally do not want to sell them,” said Nartov. “But the professions occur. There are more requests from the market participants to request the implications of lifting sanctions, and if coupons will be paid. »»
Moscow sanctions and restrictions on payments to “hostile” countries mean that the Russian government debt remains prohibited for Western investors. Overall, foreign assets of the country’s obligations have decreased and national banks have largely encountered the recent borrowing from Moscow.
“Direct exposure to the Russian market will be limited for the moment for Western investors due to the restrictions of the Central Bank of Russia,” said a fundaler based outside the West. These investors “should have to find a trustworthy partner of a neutral jurisdiction to bring their tickets back to the Russian market”.
