Outgoing White House press secretary Jay Carney called the bottom in Russian stocks. By accident.
Back on March 18, in response to a question regarding investing in Russia, Carney said he wouldn’t recommend investing in Russian equities, “unless you’re going short.”
Since the first day of trading following that comment, the RSX exchange traded fund that tracks the Russian stock market is up more than 11%.
Carney was asked the question regarding after the Russia’s stock market had surged following the initial round of sanctions announced by the White House following the Russian annexation of Crimea.
Here is the full exchange, via the White House press site:
Q: The Russian stock market is soaring the last couple days. Is this a sign that the sanctions that we’ve taken are ineffective if they’re not really paying a cost? In reality, it’s up about 8, 9 per cent in the last couple days, their main stock exchange.
MR. CARNEY: I think it’s down for the year and I think the ruble has lost value. And I think that the long-term effect of actions taken by the Russian government… will have an impact on their economy all by themselves. They will also incur costs because of the sanctions that we and the EU have imposed, and there will be more actions taken under the authorities that exist with the two executive orders that the President has signed. So I wouldn’t, if I were you, invest in Russian equities right now — unless you’re going short.”
Recently, tensions in Ukraine, which lead to the U.S. and Europe imposing sanctions on Russian businessmen, have eased some, with Russia recently withdrawing troops from the Ukrainian border.
The situation in Ukraine isn’t over by a long shot, but with tensions seeming to have eased some since Ukraine’s recent elections, investors are pouring money back into Russian stocks.
But as Jim Grant’s call last month about the investment merit of Russian energy behemoth Gazprom showed, investors are quick to hold their nose when any investment opportunity presents itself.
Here is the RSX’s performance since Carney’s comments.