The war conflict between Russia and Ukraine made Russia sentenced to several punishments by the international community. Recently, Russia is threatened with being removed from investment destination countries by investors from the west. However, this can actually benefit Indonesia.
According to economist Sen Sharma, he explained that some investors may start looking at other emerging markets to replace Russia, such as Taiwan, South Korea, Poland, Turkey, and Mexico as well as the Philippines and Indonesia.
“You can call Mexico, Indonesia, South Korea, and Turkey the MIST market. People love their acronym,” said Sen Sharma.
“Will investors embrace Russia again? If there is no liquidity, that is a moot point. But it is also hard to believe that people will rush to Russia any time soon,” said economist Sen Sharma.
It is known that Russia is part of the world’s most popular developing country BRICS, which consists of Brazil, Russia, India, China, and South Africa. However, the country’s unity is said to be lost.
This is because Russia is no longer an accessible market for world investors after the invasion of Ukraine. Maybe it’s time for investors to stop lumping all emerging markets together.
“BRICS had their day in the sun and that has faded,” said Eric Winograd, senior economist at AllianceBernstein.
Currently, major US index providers have removed Russian shares from the index for zero or effectively zero. Trading shares of several Russian companies listed in the US, such as search engine Yandex and telecommunications MTS have been suspended. Then the Moscow Stock Exchange has been closed since February 25, the day after the invasion.
“The idea that a country as big as Russia can be removed from the index is a huge problem,” Winograd continued.
According to him, it is unlikely that Russia will be included in the top emerging market funds shortly. Even for western investors who are still willing to invest in Russian assets, it is on the verge of obscurity.
