Despite a surge in interest from global investors seeking exposure to Russian-linked assets, financial experts predict that most of Russia’s economy will remain off-limits to Western capital. While some hedge funds are making speculative bets on a potential thaw in relations between Moscow and Washington, others warn of a long-term financial freeze.
Speculation has grown amid U.S. President Donald Trump’s perceived openness to Russian President Vladimir Putin, leading to increased trading in assets tied to Russia’s economy. Investors are eyeing the Russian rouble, Kazakhstan’s tenge as a proxy currency, and corporate bonds from energy giants like Gazprom and Lukoil. However, rather than a full-scale return to Russia’s financial markets—which have been largely cut off from the West since the 2022 Ukraine invasion—seasoned analysts expect key sectors to remain walled off.
Gunter Deuber, head of research at Austria’s Raiffeisen Bank International, one of the few European banks still operating in Russia, acknowledged that some limited asset swaps are taking place. “There are still significant Russian assets in the West and Western assets in Russia, and asset swaps could be a way to reduce risk for both sides,” he noted.
A recent decree by Putin allowed U.S. hedge fund 683 Capital Partners to acquire shares in Russian companies from certain foreign investors. However, the directive also mandated that the shares be sold to Russian funds in the future, dashing hopes that Moscow was signaling an imminent market reopening.
Speculative Moves Amid Continued Uncertainty
Despite these restrictions, brokers report growing inquiries about Russia-related investments. One of the most popular instruments is non-deliverable forwards (NDFs) on the rouble. These derivatives, which settle in dollars, allow investors to speculate on the rouble’s value without directly engaging with Russian markets, minimizing the risks of sanctions.
So far this year, the rouble has emerged as the best-performing emerging-market currency, strengthening by approximately 30% against the dollar. UBS data indicates that hedge funds held $8.7 billion in rouble NDFs as of early March, making it the second-largest long position across major global currencies—suggesting investors anticipate further appreciation.
“Some traders are looking for ways to benefit from potential sanctions relief without direct exposure to Russia or Ukraine,” said Anton Hauser, a senior fund manager at Erste Asset Management. However, Erste remains hesitant to enter the market despite holding some frozen Russian currency bonds. “Right now, it’s an extremely niche and exotic trade,” Hauser added.
Though demand for still-tradeable Russian corporate bonds—such as those issued by Gazprom, Lukoil, and fertilizer giant Phosagro—has increased, liquidity remains a significant challenge. Investors willing to purchase these assets often require deep discounts due to poor tradability. “The companies continue to pay bond coupons, but the ability to trade these instruments is severely limited,” said Sergey Dergachev, portfolio manager at Union Investment Privatfonds.
Before the war, hard-currency debt issued by Russian corporations was a staple in emerging markets, with nearly $100 billion outstanding—making up 4% of major bond indexes. International investors held roughly 20% of this debt, according to JPMorgan estimates.
Alternative Routes and Regional Workarounds
With direct investments in Russia still largely blocked, investors are increasingly turning to regional proxies. Sovereign bonds and currencies from Russia’s neighbors, including Uzbekistan and Kazakhstan, have seen rising demand.
Brokers from Central Asia, the Middle East, and Latin America—regions deemed “friendly” by Moscow—are also offering increased access to Russian-linked trades. Interest is growing in sanctioned rouble-denominated OFZ government bonds, despite Western restrictions on Russia’s National Settlement Depository and Moscow Stock Exchange (MOEX), which make direct ownership nearly impossible.
Ararat Mkrtchian, CEO of Armenian brokerage Sirius Capital, noted that the appeal of Russia’s domestic government bonds lies in their high yields, which hover around 15%. “Foreign capital still wants a way in because these are valuable assets, significantly depreciated but of high quality—if you remove the politics,” he said.
A Growing Divide Between the U.S. and Europe
The shifting geopolitical landscape under Trump’s leadership could further complicate the fate of Russia-related assets. While the U.S. has signaled a possible diplomatic thaw with Moscow, Europe remains steadfast in its hardline approach.
“The friendliness we see at the highest levels between Washington and Moscow does not exist between most European leaders and the Kremlin,” said Petar Atanasov, co-head of sovereign research at Gramercy Funds Management.
With Europe ramping up defense spending to levels not seen since World War II and strengthening its sanctions framework, any significant Western reintegration into Russian markets appears unlikely. Moreover, Russia’s own legal countermeasures restrict foreign ownership and trading by investors from “unfriendly” nations.
As a result, Russia’s economic structure has shifted toward greater state control, and analysts see no clear signs that Moscow is eager to reconnect with global financial markets. “I don’t believe the Russian and international financial markets will merge again anytime soon,” said Pavel Mamai of ProMeritum Investment Management.
For now, investors eager to re-enter Russia face a complex landscape—where opportunities exist, but the risks remain formidable.