NEW YORK ( TheStreet) -- During Russian President Dmitry Medvedev 's visit to the U.S. last week, among other objectives, he presented the concept of Russia as a modernizing country worthy of increased foreign investment. Investors looking to tap the country's newfound emphasis on economic reform can gain exposure with Market Vectors Russia (RSX).
A little over a week ago, Medvedev announced that Russia's capital gains tax on direct investment would be abolished starting in 2011. The number of industries that are off-limits to foreigners will also be reduced by more than 80% as the country looks to attract foreign investors.
This policy change came days before the president visited the U.S., including a stop in Silicon Valley, where he promoted a Russian tech initiative. The country wants to develop its own "Silicon Valley" and Medvedev secured a $1 billion pledge from Cisco (CSCO) over the next decade.
Some of the money is going toward building the new innovation city near Moscow. The city is expected to have its own regulations and tax code, in an apparent attempt to create a location where the Russian economy can turn a new page and get a fresh start.It is acknowledged though that there are significant barriers to attracting this type of innovative investment in Russia, chief among them being corruption and bureaucratic obstacles. Also, while Medvedev is promoting the new innovative and capitalist Russia, old frictions resurfaced with yesterday's arrest of 10 people accused of being involved in a long-term espionage ring for Russia. While the goal of the agents was mainly political, one of the targets was a wealthy financier and information about the "global gold market" was collected. Russia has stepped up its overt competition for capital, but the covert battle for economic intelligence continues. For investors that have confidence in the new face of Russia, a country looking to join the WTO with a modernizing and internationally competitive economy, there is really only one viable ETF option: Market Vectors Russia ETF (RSX). Another Russia focused equity ETF does exist in SPDR S&P Russia (RBL), but RBL's volume is so low that investors could face concerns over the liquidity of the fund.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV