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Russia-focused ETFs on track for worst monthly losses on record as Moscow attacks Ukraine

By Mark DeCambre

It looks like a red dawn for Russian stocks this month.

Exchange-traded funds that offer the best way to gain exposure to Russia's stock market were on pace for their worst month on record, as sanctions levied against Moscow, in response to its unprovoked attack against Ukraine, slam the Kremlin.

The VanEck Russia ETF (RSX) was down 28% on Monday, and down 54% so far in February, putting the popular ETF on pace for the worst monthly loss since its inception back in April of 2007.

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The fund now stands at around its lowest price since the depths of the financial crisis in 2008-2009, after the Central Bank of Russia announced the Russian stock market will be closed Monday as tightening sanctions in the wake of Russia's invasion of Ukraine stokes extreme volatility in Russian assets and whacks the ruble

The VanEck ETF has some $188 million in assets and carries an expense ratio of 0.67%, translating to an annual cost of $6.70 for every $1,000 invested.

Another popular Russia fund, the iShares MSCI Russia ETF (ERUS) also was aiming at its worst month on record. That ETF also was down by about 54% so far in February, which would represent its worst month since it launched in November 2010. The much smaller fund holds some $14 million in assets and carries an expense ratio of 0.57%.

Trading in several Russia-related stocks on the New York Stock Exchange and Nasdaq was halted Monday. Those include American depositary shares of steelmaker Mechel PAO (MTLR.MZ), telecom operator Mobile TeleSystems (MTSS.MZ) and Russian online real estate listings company Cian PLC CIAN, which the exchanges said were halted due to "regulatory concern." Shares of search-engine operator Yandex NV YNDX and e-commerce platform Ozon Holdings PLC OZON were halted on the Nasdaq for news pending.

Because shares of Russian companies were halted in the U.S. and the Russia exchange is closed, the ETFs offer the clearest look into how sanctions impact businesses in Moscow.

Russian stocks listed in London came under heavy selling pressure on Monday

The moves come as Russia's ruble hit an all-time low of 119.25 per dollar on Monday, according to FactSet, before coming off its lows. In volatile, sporadic trade, it was last down 13.4% to 95.07.

Meanwhile, U.S. markets were also taking it on the chin, with the Dow Jones Industrial Average down more than 500 points, and the S&P 500 and Nasdaq Composite indexes underwater.

-Mark DeCambre

 

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02-28-22 1443ET

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