Russia's potential return to global markets could present an opportunity for cautious investment, but key measures are needed to restore confidence in the country that triggered Europe’s biggest conflict since the Second World War, according to analysts.
Moscow's invasion of Ukraine in February 2022 led to sanctions by many governments and international brands pulling out of the country, triggering an exodus of investment.
On Thursday, Russian President Vladimir Putin said he supported the idea of a 30-day ceasefire in Ukraine, following a meeting between delegations from Kyiv and Washington in Saudi Arabia this week. The Kremlin said on Friday that it is preparing for direct talks between Mr Putin and US President Donald Trump.
That has led to renewed interest in Russian assets as markets and investors anticipate a Trump-brokered deal – but a ceasefire alone is unlikely to be enough, said Ahmad Assiri, a research strategist at broker Pepperstone.
“For Russia to reintegrate into global financial markets, key steps include a formal peace treaty with enforceable terms that reduce geopolitical uncertainty, sanctions relief from the US and EU, including access to international financial systems like Swift and an easing of debt market restrictions,” Mr Assiri told The National.
While interest in Russian markets is slowly increasing, especially from investors in regions less constrained by western sanctions, moving too soon to restore financial ties could damage investor reputation, given the country's role in the conflict, said Arun John, chief market analyst at Dubai-based Century Financial.
“There’s also a legal risk if sanctions aren’t lifted or get reimposed later,” Mr John told The National. “Moreover, rebuilding Russia’s economy won’t be easy, as doubts would still persist about the use of investor funding for an unfinished war. This uncertainty could make many wary of fully returning to the Russian market.”
Some reports suggest that although the lifting of sanctions might start during 2025, their complete removal would not be until 2027 at the earliest.
Assuming there is progress towards the end of the Ukraine war, the rollback of sanctions covering food, fertilisers, pharmaceuticals and select banking access could begin by the middle of this year.
Any deal between the warring nations might also result in a modest 0.2 per cent economic growth in the euro area, according to analysts from MUFG Research,
They also flagged varying circumstances in base-case scenarios. Those include crude oil giving a limited boost to Russian supply as production is constrained by Opec+ strategy, not by the sanctions, and gains for energy companies in which Russia has stakes, including BP-Rosneft and TotalEnergies-Novatek.
MUFG does not take a view on the course of the Russia-Ukraine war and how it might be resolved, but it “recognise[s] market expectation surrounding a resolution is growing following the re-election of Mr Trump”, their analysts said.
Rising interest
In February, the combination of low supply and rising demand for dollar and euro-denominated Russian bonds led to a surge of about 5 per cent on the asset. That rise occurred amid increasing expectations that Mr Trump would arrive at a deal to end the war, which would eventually lead to Russia’s return to the financial world.
Investors expect that Russian assets, which are currently at deep discounts, could face significant price appreciations if the US and its Group of Seven allies ease or remove their sanctions on Russia, Mr John said.
“These have always been one of the first asset classes to react to macroeconomic moves, and these have already started surging amid the increased demand,” he said.
At the same time, Russian corporate debt has been recovering: the total amount of distressed bonds trading below 80 cents and at a deep discount on sovereign bonds has declined by 13 per cent since the start of 2025 to $35.3 billion, according to Bloomberg data.
“This marks one of the most significant drops recorded this year, suggesting growing investor confidence in Russian credit,” Mr John said.
Russia's currency also stands to gain. From a fundamental standpoint, if the war comes to an end and if the sanctions are eased or removed, it could lead to a surge in demand for the rouble, he added.
The rouble has strengthened against the dollar this year amid expectations of warmer ties between Moscow and Washington, potentially leading to progress in Ukraine and the lifting of Russian sanctions.
It has gained nearly 10 per cent against the greenback in the past month and seven per cent against China’s yuan, the most traded foreign currency in Russia.
Most of this can be attributed to the dollar’s weakness, with the US dollar Index – a measure of its value relative to a basket of foreign currencies – declining nearly 3 per cent in the past four weeks.
A ceasefire might offer a short-term lift to the rouble by slowing capital flight, but deeper structural issues remain: sanctions continue to restrict Russia’s access to foreign currency reserves, limiting inflows and complicating trade settlement, Mr Assiri said.
“Without a full-scale financial normalisation, the rouble remains exposed to policy uncertainty,” he added.
Meanwhile, a reduction in geopolitical risks might provide some support to valuations on Russia's stock market. The Moscow Exchange – with foreign investors still locked out – has adapted to the sanctions by increasing domestic participation.
“Meaningful re-engagement depends on broader economic normalisation, access to western capital and restored confidence in corporate governance. Without a shift in sanctions policy, international capital will remain on the sidelines,” Mr Assiri said.
Amid increased business activity, companies such as Gazprom, Sberbank and Rosneft – majors in their respective industries – could be expected to gain the most, primarily due to their state-owned status, Mr John said.
Russian authorities have also started “closed-door talks” with some western companies for their possible return to the domestic market, Russia's Interfax new agency reported on Thursday, quoting Mr Putin.
However, they will only be allowed to return on the condition that “those niches already occupied by Russian companies will remain for them”, he said at a press conference after talks with Belarusian President Alexander Lukashenko.
Russia did not identify the western companies. It is also unclear whether they will consider returning to Russia's consumer market, which serves a population of more than 144.8 million.
“Considering the sensitivity of the geopolitical crossover, it is too early to comment on the success or the failure of Russia’s return [to global markets],” Mr John said.
“However, historically, major price momentums in asset classes have occurred when a fundamental trigger has coincided with a technical trigger. Currently, all these asset classes are at key levels and it could be this very ceasefire that could bring the much-awaited price movements.”
