With Ukraine Under Siege, We’ve Dramatically Reduced Our Exposure to Russia

“Ukraine’s glory has not yet died, nor her freedom,” begins the beleaguered Eastern European country’s national anthem. It goes on to promise that Ukraine’s “enemies will perish, like dew in the morning sun, and we too shall rule, brothers, in our own land.”

These words are being challenged like never before in the 30+ years since Ukraine gained its independence following the collapse of the Soviet Union. I join millions of others around the world in hoping that the Ukrainian people can continue to “rule their own land” following a resolution to this crisis.

Here at U.S. Global Investors, we believe that government policies are a precursor to change, and President Vladimir Putin’s brazen, unprovoked decision to invade a sovereign nation is no exception.

In response, we have sold nearly all of our Russia-listed stocks, leaving only positions in oil producers Lukoil and Gazprom Neft and a very small position in Raspadskaya, a coal producer. U.S. sanctions have so far targeted Russian banks, not its energy sector.

Our withdrawal was well timed, as Russian stocks had their worst one-day selloff on record. The dollar-denominated RTS Index fell around 40% on Thursday.

You may wonder when we’ll feel comfortable enough to dip our toes in the Russian market again. The simplest and most honest answer is that it’s too early to tell. The situation is highly volatile and changing by the hour.

Putin has never been a friend to the West, but this week he has obliterated any doubt that he’s a threat to the rule of law and his neighbors’ right to exist. Therefore, it may be decided that we can’t invest in Russia again until the Kremlin is under new management, one way or another. Which is a shame because we’ve always liked Russian stocks for their cheap valuation and attractive dividends.

Having said that, Putin signed a law last year that effectively resets his term limits to zero, allowing him to potentially remain in office until 2036. A lot can happen in 14 years.