Russian stocks climbed after Donald Trump won the US presidential elections on November 5 on hopes that a new administration in Washington will try to end Moscow's war in Ukraine.

Trump has promised to try to end the war in Ukraine despite the challenges of resolving the bitter conflict. The president could also improve relations between the US and Russia if a peace settlement is reached. This would benefit Russian businesses struggling under stiff Western-led sanctions.

State-owned energy corporation Gazprom (up 2.6%) and state airline Aeroflot (up 3.8%) rose on November 7 after Trump won the election. The Russian stock index, MOEX, climbed nearly 2% from November 5 to 6, peaking at 2,785 on November 11.

Gazprom, Aeroflot Russian stock prices, October 18-November 18, 2024, Source: Tradingeconomics

After President Vladimir Putin sent troops into Ukraine in 2022, the US and its allies imposed sweeping sanctions against Russia. They forced companies to cut back on business ties and divest from assets. Western companies that kept significant operations there have also seen their valuations pressured, Bloomberg reported.

Shares In Companies with Russian Business Rose

Shares in companies that have interests in Russia also jumped after the Trump win. Optimism about a de-escalation in the Russia-Ukraine conflict caused the rally.

Vienna-based Raiffeisen Bank International AG (OTC:RAIFF) gained over 15% between November 4 and 7. Hungary's budget airline Wizz Air Holdings Plc (OTC:WZZZY), listed on the London Stock Exchange (LSE), gained over 10% in the few days following the election from 1375p to 1567p on November 11.

In Turkey, construction company Enka Insaat (OTC:EKIVF) was up 7.4% the day after the election, and beer maker Anadolu Efes (OTC:AEBZY) advanced 24.30% from November 5 to 14.

Conversely, the Shanghai Stock Exchange Index, which rallied around 40% following the government’s intervention in September, lost more than 6% following the election on concerns of a renewed trade war with the US.

Senator Marco Rubio, Trump's nominee to serve as secretary of state, and Republican Mike Waltz, his national security advisor, are considered China hawks. In 2021, Waltz called for the US to boycott the Beijing Winter Olympics the following year over China's human rights record, likening the event to the infamous 1936 Summer Games that were held in Nazi Germany.

Russia Central Bank Hikes Key Interest Rate

Despite the post-election bump, the Russian stock index has steadily fallen since July 2024 as business struggles with the reality of a war-time economy. The Russian ruble traded below a one-year low against the dollar on Monday. It is down about 10% for the last 12 months.

RUB/USD, Source: Trading View

Russians are also getting hit hard by inflation as the Kremlin pours billions of rubles into military industries. Russia boosted defense by 25% in 2025 to 6.3% of GDP, Reuters reported, citing draft budget documents.

In September, the current seasonally adjusted price growth rose to 9.8% in annualized terms from 7.5% in August. In response, the Bank of Russia raised on October 25 its key interest rate by 200 basis points on October 25 from 19% to 21%, above expectations of 100 basis points.

Russia Interest Rate, 2022-2024, Source: Trading Economics

"We have been forced into beginning a monetary tightening cycle," Elvira Nabiullina, Russian central bank governor, said on October 31. "Businesses are concerned about the implications for investment, production capabilities and economic growth. Households are concerned about when we will be able to tame growing prices."

Outside the defense industries, companies can't compete for workers without paying higher wages. In turn, they are charging higher prices, CNN reported. News agencies have reported a spike in the theft of butter, highlighting the wartime economy's impact on prices.

Russian Businesses Struggle With Higher Rates

Monetary policy may not be enough to slow inflation, with Russia spending Soviet-level amounts on defense and security. Sergey Chemezov, head of the state-owned defense conglomerate Rostec, warned that "even arms sales don't generate enough profit" to cover the debt with rates at 21%.

"At the current interest rate, it's more profitable for companies to halt expansion or even downsize and put funds in the bank rather than continue operations," Russian billionaire Alexey Mordashov said. He is the majority shareholder in the steel company Severstal.

Oleg Kuzmin, an economist at Renaissance Capital, warned that highly leveraged companies face heightened risks. Russian firms typically rely on new loans to pay off existing debt, but the strategy has become difficult with current interest rates, he added.

Peak economic growth in Russia "passed most likely in the middle of this year," Kuzmin said.

Disclaimer:

Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. European Capital Insights is not responsible for any financial decisions made based on the contents of this article. Readers may use this article for information and educational purposes only.

This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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