Despite sanctions tied to the annexation of Crimea, Russian equities are relatively buoyant. The broad-based MSCI equity index for Russia is up 23% in dollar terms so far this year. That qualifies the stock market as among the best performing worldwide. Yet there is no apparent reason to buy the story. Inflation has led to elevated interest rates; the economy will deliver only token growth in 2017. Corporate restructuring gains are academic without a promising sales outlook. One bright spot is agriculture, but that is not sufficient to carry an oil-dominant economy. Russian stocks appear to have become just a momentum play among specialist investors. Mindfully, technical factors often harbor considerable risk. Saber-rattling between Putin and the new American president could lead to a flood of sell orders. ■
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