BLOOMBERG: Russia Stocks Are Trump Trade Gone Wrong as Sanctions Risk Grows




June 15, 2017 | By: Ksenia Galouchko.

Russian stocks headed for their biggest slump in 17 months after the U.S. senate signaled it’s ready to expand sanctions against the Kremlin.

The country’s benchmark Micex Index dropped 3.3 percent by 3:13 p.m. in Moscow on Thursday, extending a decline since a record high reached in January to more than 20 percent. The Senate voted overwhelmingly to add the Russia measure to a bill sanctioning Iran amid a probe into the Kremlin’s meddling in last year’s presidential election. A 2.9 percent drop in Brent crude this week has also contributed to declines.

Optimism earlier this year that U.S. President Donald Trump would improve battered relations with Russia has fizzled amid an escalating scandal in Washington over his ties to the Kremlin. Congressional committees and the Federal Bureau of Investigation are examining the Russian interference in the election and whether there was any collusion with President Donald Trump’s campaign.

“Any speculation about the expansion of sanctions pushes foreign investors to cut their Russia holdings,” said Vladimir Vedeneev, chief investment officer at Raiffeisen Capital Asset Management in Moscow. “The hope that Russia’s relationship with the West will improve is completely gone.”

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