Russia’s dollar-denominated stock index has risen about 15% this year as high oil prices outweighed mounting political risk.
The RTS index rose 38% in 2021, hitting a 10-year high of 1,900 in October, driven by oil prices, which have risen by more than half this year as global economies reopen.
Oil is Russia’s biggest export, while oil companies make up a significant percentage of the RTS index.
However, Russian stocks fell about 15% from their October highs to end the year at just under 1,600 following a Russian military build-up on the border with Ukraine that has raised fears of an invasion.
The United States and Europe have warned Russia that it will face massive economic sanctions if it invades Ukraine, scaring some investors.
The Russian stock market was also hit at the end of the year by comments from the US Federal Reserve that it could raise interest rates in 2022.
Rate hikes in the United States make riskier assets like emerging market stocks and bonds less attractive.
The Russian ruble ended the year almost flat at around 75 to the dollar.
The ruble strengthened to 69 in October on high oil prices, but retreated with Russian stocks amid the Kremlin’s growing stalemate with the West.
Nonetheless, the Russian stock market and currency have performed better than some of their emerging market counterparts.
The Turkish lira is expected to end the year down around 43%.
Meanwhile, the broader emerging markets index is on track to close down around 4.5%, in large part because of China’s crackdown on its biggest tech companies.
However, the progress of the RTS index is still lower than that of the US benchmark S&P 500, which is close to ending the year up 25%.