Mobius Sees Lid on Russian Stock Rebound as Sanctions Lingering

Russia’s equity rebound will falter as the lingering threat of tougher sanctions over Ukraine deters investors, according to Mark Mobius.

“In the current scenario, it will be difficult for the rally in Russian equities to last,” the executive chairman of Templeton Emerging Markets Group said by e-mail Wednesday. “The problem is the sanctions, which will put a lid on the amount that investors are willing to put into the market. Once there is a sign that sanctions will be lifted, then the opportunities will be better.”

Russia’s benchmark Micex and RTS indexes have rallied more than 10 percent this year as recovering oil prices and a cease-fire in Ukraine stoked investor appetite for the cheapest emerging-market equities. Last year, the RTS was the world’s worst performer with a drop of 45 percent as tumbling oil and U.S. and European Union sanctions drove the economy toward recession.

Templeton continues to hold Russian equities without being an “active” buyer, Mobius said.

The ruble’s weakness has made Russian stocks “more attractive” in dollar terms, he said, with the consumer industry being the most promising area.

The RTS climbed for a second day, adding 0.6 percent, while the Micex declined 1.2 percent to 1,598.84.

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