How the Russian market connects to the world
intermediate
Automated material · TradeAlmanac editorial deskPrepared by a language model from our stored data and checked by an editor.
Содержание · 4
The Russian market is not isolated, and it does not copy the world market either. The link is mediated by several channels.
The commodity channel
The main one. A large share of capitalisation belongs to commodity exporters, and their revenue depends on world prices — Sectors of the Russian market: what it is made of.
Global demand for commodities depends on growth in the largest economies, so a slowdown among key consumers reaches Russian securities through the price of the goods.
The rates channel
Rates elsewhere affect global capital flows and commodity prices. Their effect on the local market is indirect, because the rouble rate is set by domestic conditions — The key rate: how a Bank of Russia decision reaches your portfolio.
The risk appetite channel
In periods of global risk aversion nearly everything risky gets cheaper at once. That is when correlations rise and diversification weakens — Correlation: why diversification sometimes stops working.
What it means for a portfolio
Local diversification offers no protection against a global downturn, because the commodity channel always works.
Related: Commodity markets: why access is harder than it looks.
Prepared by a language model from our stored data and checked by an editor.
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