The monthly profitability of hedge funds investing in Russia reached 17%, a 16-year high. Positive factors were rising oil prices and strengthening of the ruble exchange rate

Photo: AP

The 17% return that hedge funds focused on investing in Russian securities achieved in March is the highest since August 2000, according to data provided by Bloomberg . At the same time, the MICEX index grew by only 1.7% in March.

Bloomberg notes that the yield of hedge funds that specialize in investing in emerging markets as a whole amounted to 7.5% in March.

The increase in profitability of hedge funds concentrating on investments in Russian assets occurs against the backdrop of a strengthening ruble exchange rate and rising oil prices. The Russian currency after falling to a historical low of 85.99 rubles in January. per dollar strengthened by 23%, demonstrating the best growth rates among emerging market currencies. The price of a barrel of Brent oil increased from $28.21 from mid-January to $43.36 by April 11 (the highest values since the beginning of December).

In March, stock speculators' bets on the ruble strengthening against the dollar reached a three-year high. At the end of March, the number of bets on rising oil prices, the main driver of growth in the Russian market, reached its highest level since 2014.

Despite the optimism of hedge funds, Russia continues to demonstrate weak macroeconomic indicators. The country's GDP has contracted every quarter since March 2015 and is not projected to begin growing until early 2017. Analysts surveyed by Bloomberg predict that by the end of the year the ruble/dollar exchange rate will decrease by 6%.

As Anna Vaananen, head of the Credit Suisse fund investing in Russia, told Reuters , so far there are no large financial injections from abroad into the Russian economy, but the strengthening of oil and the ruble exchange rate is attracting the interest of investors. According to the head of the fund, the Russian economy will reach its lowest level in the second quarter and from then on will begin to recover against the backdrop of falling inflation, rising consumer optimism and lower interest rates.

The profitability of hedge funds' investments in Russia has reached its highest level since 2000