The following heatmap from Research Affiliates shows that close to 70% of Russian exports are energy related but its also important to remember that many countries (and most notably Germany) rely heavily on Russian energy imports. Moreover, it will take decades of infrastructure investment to lower Europe’s dependence on Russian energy while Russia needs foreign capital and foreign technology to improve its overall economic efficiency as well as its ability to produce commodities like energy. Hence, Germany and other countries oppose outright trade restrictions or strong Russia sanctions over the Crimea and Ukraine issues.
On the other hand, other countries that are heavily dependent on oil export revenues like Norway and the United Arab Emirates are not experiencing Russia’s level of inflation, currency turmoil and stock market instability.
To read the whole article, The Wild, Wild East: Risks and Opportunities in Russia, go to the website of Research Affiliates. In addition, also have a list of Russia ADRs here and Russia closed-end funds here.
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