Markets like US-Russia detente

RUSSIA / FSU POLITICS - In Brief 25 Jun 2021 by Alex Teddy

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Since Biden's meeting with Putin the markets have reacted positively. It could mean the first sustained period of smooth sailing after over a year of shocks. On June 18 the RUB reached its highest level in over 12 months against the USD, and the Russian stock market is at its highest ever level.The Black Sea Incident of June 23 does not appear to have affected the markets. The presidents discussed climate change, nuclear arms limitation and global conflicts. The Geneva Summit did not result in any major agreements. The placid and problem-solving approach of both sides was welcomed. Unlike Trump, Biden is a known quantity. He is fairly hostile to Russia. His predictability is easier for Moscow to deal with than Trump's erraticism. No one thought that Geneva would solve much. Biden tried pressing the reset button when he was vice-president. The fact that this summit went ahead at all is good news. He might very well have cancelled when he accused Russia of hacking the Colonial Pipeline.RUB assets are likely to climb in 2021. That is because of a reduction in geopolitical turbulence. Russian companies and the Russian stock market have traded at a discount for years because of the risk of sanctions.Russia has the most undervalued stock market of all emerging economies. That is if you look at price-to-earnings ratios. Greater stability will lead to the value of the stock market rising.T S Lombard and Oxford Economics have both signalled they are sanguine about Russian markets now.Even if additional sanctions follow, the indications are that these will not be disastrous. Sanctions imposed under Biden have always avoided raising the stakes too much. Berlin and Paris want to t...