Tuesday, March 18, 2014

1st foray investing overseas... huh? MICEX, DBXT MSRussia10US$ (J0R)?

DBXT MSRussia10US$ (J0R)

Now that Crimea has joined Russia Federation, is the standoff over? If situation can only become better from now, then should we start considering investing in Russia Stock Market Index, the MICEX?
Now do not get me wrong, I am not giving a recommendation here. It is already risky enough to trade stocks, and it could be worse trying to invest in a foreign country’s stock index but its possible through DBXT MSRussia10US$ (J0R) listed on SGX.
2 additional risks here to bear in mind, one foreign risk; the foreign law, the foreign culture, every thing that is foreign is risky simply because you are less familiar with it. At least you are more familiar with SG regulations as you are staying here, but foreign country...
Second risk, currency exchange. You may get the price right, it may rise, but if its currency depreciate against SG$... worse, assuming the ETF purchase MICEX top 25 stocks in Russian rubles, then sell the fund in US$, but you bought via SGX with SG$, so its altogether 3 ways exchange.
Fortunately, both the Ruble currency and the MICEX stock index have fallen since the Ukarine-Crimea crisis started, if the worse is over; or perhaps over the slightly long term say 1 year later, perhaps Putin & the rest of the world will forget & be merry again? Think about past Argentina crisis… there’s so many crisis even Russia once defaulted its bonds, but it all seem so distant when it was only last century and we are only 14 years into 21st century J
My point is, MICEX has fallen, Ruble has fallen, but has all its great businesses there affected? Are they exporting less goods, less natural gas? Or will all this be temporary? If this are all temporary, is there an opportunity lies within this crisis?

All will this be an once in a lifetime opportunity? How often do you see Russian MICEX index selling at PE ratio of only 5.32? Hack, the earnings will return my capital after less than 6 years... Just saying :)

Update on Trades
As a result of this MICEX opportunity, I decided to close SATS and divert monies to DBXT MSRussia10US$ (J0R). This is a mid-term trade which I hope to exit once situation normalise, and price go back to its normal range of 1440-1500.
I am still holding on to Popular, looks like its still sleepy, lets wait a little for its Dividend 1 cent in Sept 14...

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