RUSSIA - Markets Don't Lie

Ajouté : 2026-05-26

[00:00:00]Hi, welcome back to the channel. In today's episode, I want to talk to you about one of the biggest contradictions in the Russian economy right now.

[00:00:06]Because whenever people discuss Russia's economic performance, the conversation almost always comes back to one thing, the ruble. And historically, currencies have often been viewed as one of the clearest indicators of economic strength. If an economy is growing strongly, attracting investment, generating confidence, and performing well, normally the currency reflects that. However, as we've discussed in previous videos, the ruble in Russia is no longer telling us the full story.

[00:00:35]Because when you start looking beyond the exchange rate itself and begin looking at what investors are actually doing with their money, a very different picture starts to emerge. And that's where the stock market becomes incredibly important because ultimately stock markets are one of the clearest indicators of what's actually happening inside an economy. They reflect corporate profitability, investor sentiment, growth expectations, and long-term confidence. And when you compare what's happening in Russia with what's happening in the USA, Japan, Europe, and the rest of the world, the gap is becoming impossible to ignore because markets don't lie. And today, we're going to have a look at five charts that reveal far more about the real state of the Russian economy than most people would realize. But before we go any further today, could I ask anybody that hasn't subscribed to the channel yet to please hit that subscriber button? Also, give me a thumbs up for this video. And don't forget, there are now around two weeks left for my competition where you can win either my house or a cash alternative prize. So, if you've been thinking about getting involved, now's the time to do it because the clock is ticking down fast. And I'm also offering some amazing deals right now, the best deals that I've ever offered. So, if you want to get involved, now's the chance to do it. So, either QR scan the QR code on the screen now or click the link in the description below. It will take you straight through to the independent company that's hosting that competition on my behalf. Now, the reason this story matters is because for the last couple of years, we've repeatedly heard people pointing towards the strength of the ruble as evidence that the Russian economy is resilient. And on the surface that sounds logical because traditionally stronger currency equals strong economy. Weak currency equals weak economy. That's normally the relationship that you expect. But Russia is no longer operating under normal market conditions. The country is heavily sanctioned. International capital flows have collapsed. Large numbers of Western companies have exited. There are restrictions on currency movements, capital controls, and significant intervention from the Russian central bank. So, the ruble today is not behaving like a completely free market currency. And that's important because it means the exchange rate no longer gives us a clean picture of what's happening inside the wider economy. And there's another major issue here. Even countries that are still trading with Russia are increasingly avoiding the ruble itself. Russia's repeatedly attempted to increase the use of the ruble in international trade.

[00:03:07]President Putin actually wanted it to rival the US dollar in terms of a procurrency. But in practice, a lot of transactions are now taking place in alternative currencies, particularly the Chinese yuan because Russia's biggest trading partner is now China. So even where trade continues, it's not necessarily creating the sort of demand for rubles that you would have expected.

[00:03:30]And that's why looking purely at the currency can be extremely misleading.

[00:03:34]Now if we compare that with the stock market because stock markets are fundamentally different. It reflects what investors think about the companies today and also their future profitability. It reflects confidence.

[00:03:47]It respects growth expectations, liquidity, capital flows, corporate performance and long-term economic outlooks. And in Russia, the main benchmark index is the MOEX Russian index. This is made up of the largest and most important Russian companies, including banks, oil firms, mining businesses, telecom companies, and industrial groups. So, if the Russian economy was genuinely booming, you would expect Russian companies to be thriving.

[00:04:17]You would expect investors to be pouring money into Russian equities. You'd expect the stock market to be pushing higher alongside the rest of the world.

[00:04:25]But that is not happening. So let's have a look at the first chart. This compares MOEX Russian index with the S&P 500 in the USA. That's the 500 biggest companies listed on that exchange. And immediately you can see a huge divergence. Now clearly global markets were impacted by inflation, interest rates, and economic uncertainty over the last few years. But despite all of that, the S&P 500 has recovered strongly and has continued moving to record highs.

[00:04:55]Meanwhile, the Russian market has gone in the opposite direction. The MOEX collapsed in 2022, recovered some of those losses initially, but then gradually started deteriorating again.

[00:05:07]And this is incredibly important because the US stock market is effectively saying that investors still have confidence in future earnings growth, AI development, technological innovation, and corporate profitability. Whereas the Russian market is telling us a very different story. Now let's have a look at the second chart. This compares the MOEX against the NASDAQ. And the NASDAQ is basically got a higher leaning towards tech businesses. And this chart is even more dramatic because the NASDAQ has surged over the last couple of years largely because of investor optimism surrounding artificial intelligence and technology businesses. Meanwhile, Russia has been left behind. It's struggling to actually access a lot of the technology and that highlights another major issue for the Russian economy, technological isolation. Because sanctions and export restrictions have made it significantly harder for Russia to access advanced semiconductors, industrial systems, software, and high-end manufacturing equipment. And over the long term, that creates a serious productivity problem.

[00:06:09]Modern economies increasingly depend on advanced technology. If you become isolated from that ecosystem, growth inevitably starts to slow down. Now, the third chart here compares MOAX against Japan's Nicay index because I didn't want to just talk about the USA. And this comparison is fascinating because Japan spent decades being viewed as one of the world's most stagnant economies.

[00:06:33]But over the last few years, the Nikai has surged to levels not seen for decades. And once again, Russia has massively underperformed in comparison.

[00:06:42]So even compared with economies that were previously viewed as weak or stagnant, Russia is still falling behind. Now let's zoom in specifically on the MOAX over the last couple of years because this chart tells us something really important. This is not a market that has stabilized and recovered strongly. Instead, what we're seeing is gradual deterioration. Weak rallies, lower highs, continued downward pressure. And remember, stock markets are forwardlooking. They're constantly trying to price in the future. So if investors genuinely believed that the Russian economy was entering a long period of strong growth and prosperity, that optimism would be reflected in stock prices. But we simply are not seeing that happen. Now the fifth and final chart here is probably the most important of all because this compares the strength of the ruble with the performance of the Russian stock market.

[00:07:32]And this is where the contradiction becomes impossible to ignore. The ruble has strengthened significantly, but at the same time, the Russian stock market has continued weakening. Now, under normal economic conditions, those two things would usually move broadly together in the same direction. Strong economy, strong corporate earnings, strong stock market, strong currency.

[00:07:53]But in Russia, that relationship has broken down. The currency is being heavily influenced by intervention controls and restrictions. Whereas the stock market has given us a much clearer picture of underlying investor confidence and that confidence clearly remains weak. Now why is this happening?

[00:08:11]Well, there are maj number of major pressures facing the Russian economy right now. As I'm sure you're aware, interest rates remain extremely high.

[00:08:19]That damages borrowing, investment, and corporate growth. Inflation remains elevated. Military spending is crowding out other parts of the economy. There are labor shortages, technology shortages, and ongoing uncertainty surrounding sanctions and future trade access. International investment has largely disappeared. And all of this creates a very difficult long-term environment for businesses because ultimately markets are always looking forward. They're constantly asking one question. What does the future look like? And right now, the Russian market is not pricing in a particularly optimistic future. So, I think the really important takeaway from all of this is that people need to stop looking at the ruble in isolation because the currency alone no longer tells us the real story. The stock market is giving us a much clearer indication of what's actually happening inside the Russian economy. When you compare Russia's market performance with the USA, Japan, and the rest of the world, the message coming from investors is becoming increasingly clear. Markets don't lie.

[00:09:21]So, I'll keep you posted on any further news and development, but hopefully you found today's video useful, informative, and most importantly, thoughtprovoking.

[00:09:27]If you've liked what I've said, then please give me a thumbs up. Please subscribe to the channel if you haven't done so already. Don't forget, there's around two weeks left in my competition where you can win my property or a cash alternative prize. This is another way of funding the channel. If you'd like to get involved and have a bit of fun, then uh scan the QR code on the screen there.

[00:09:44]If you know how to do that, or click the link in the description below. That's easier. it will take you straight through to the independent company that's hosting the competition on my behalf. Also wanted to mention that Joe Blogs Russia is now live. I'm putting all of the Russian videos onto that channel. So if you're not interested in the variety of content that I'm posting now, then that's probably the best place for you to go to. I'm also uploading a lot of the back catalog, so you'll find there's a mixture on there of new videos and old videos. Some of those old videos are really quite interesting because a lot of the detail is very relevant today even though some of it is quite old. So worth having a look at and also worth having a look at me when I was a little bit younger and uh the studio looked a little bit different. So there's a link at the end of today's video. It will take you straight through to one of those videos. Please subscribe and watch some of those videos cuz I need to build the content and the watch hours. I also wanted to mention that Joe and Naz is live now. It's a slightly different type of channel. Bit more fun, bit more irreverence. Uh it will bring you a smile to your face. We're doing some food and pubs and variety of other things. So, I think you're going to like it. Check it out. You'll see me in a slightly different format. Um quite good fun. There's a link at the end of today's video that will also take you through to one of those. Please subscribe and watch some of the content because we're very early stages. We need to um build up more subscribers and watch time. Hopefully, it'll put a smile on your face. And here's something else that will do exactly that.