Investors Rush to Russian Assets Amid U.S.-Russia Talks, Bloomberg Reports

Following the start of negotiations between Russia and the U.S., international investors have begun buying up Russian-linked assets at a rapid pace, Bloomberg reported on February 28.

Despite hundreds of billions of Russian assets still being frozen under U.S. sanctions, investors are seeking alternative ways to tap into the market. Many are turning to the Hong Kong Stock Exchange, where shares of United Co. Rusal International PJSC, Russia’s aluminum giant, have surged 75% this month. In Vienna, investors have driven up Raiffeisen Bank International AG—a bank with operations in Moscow—by 35% this year, while in Budapest, OTP Bank Nyrt, which still operates in Russia, saw an 11% rise in stock value.

Currency markets are also reacting. In Kazakhstan, one of Russia’s key trading partners, the tenge has strengthened by 4% this month, making it one of the best-performing currencies globally, according to Bloomberg.

Gregory Marinichev, a securities lawyer at Morgan, Lewis & Bockius in New York, told the publication that his firm is seeing a surge in inquiries from hedge funds, family offices, and private investors eager to trade in Russian markets.

“They want to be the first ones in the trade,” Marinichev said. “But for now, there is not much we can tell them other than to follow the news.”

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On Russia’s closed markets, stock prices and trading volumes are also rising rapidly. The ruble has gained 15% against the U.S. dollar since the start of the year, according to the report. However, trading in Russian assets remains restricted, available only to local investors and those from “friendly” jurisdictions—countries that have not imposed sanctions, such as the UAE and Kazakhstan.

Before the full-scale invasion, foreign investors held around $150 billion in Russian stocks and government bonds, which were once a key part of emerging market indices. Since then, much of this money has either been withdrawn or trapped in non-resident accounts in Moscow, Bloomberg notes.

The legality of trading Russian-linked assets remains a gray area, the report adds. Paul McNamara, a portfolio manager at GAM UK Ltd. in London, revealed that bankers have approached him offering ruble-denominated bonds, previously issued by institutions like the European Bank for Reconstruction and Development and the World Bank before Russia’s invasion of Ukraine.

While these securities are not under sanctions, investing in them would require negotiations, McNamara said, adding that for now, he is staying away from the trade.

Previously, German Finance Minister Jörg Kukies has stated that Russia will not be readmitted to the Group of Seven (G7), despite a proposal from U.S. President Donald Trump. In an interview with Reuters on February 25, Kukies emphasized that the G7 remains firm in its condemnation of Russia’s full-scale invasion of Ukraine.