By Danilo Masoni

MILAN (Reuters) – A Russia-exposed ETF rose by more than 100% in London on Thursday in a sign that some investors see current distressed levels as a potentially cheap entry point for Russian assets, even as the Ukraine crisis intensifies.

Exchange traded funds (ETFs) remain one of the few ways left to gain exposure to Russia in the wake of Western sanctions against Moscow over its invasion of Ukraine, as they continue trading even if liquidity in the underlying asset dries up, although this makes it difficult to estimate the correct value.

The Moscow bourse has been closed for four days in a row and Russian stocks and bonds are now “in the realms of utterly uninvestable”, said Peter Harrison, CEO of Schroders.

Like other asset managers, Schroders has pending sell orders on Russian stocks.

Despite many investors not touching Russian securities, shares in BlackRock’s iShares MSCI Russia ADR/GDR ETF, which tracks depositary receipts of Russian firms like Sberbank and Gazprom rallied by as much as 106% after hitting a record low on Wednesday.

Nevertheless, the ETF’s price is still down by more than 80% this year and volatility is set to remain high until signs of a possible solution to the crisis, with reports of a further round of peace talks on Thursday raising hopes for some.

“The bounce reflects both bargain hunting and also potential belief that some resolution may be in sight,” Jawaid Afsar, sales trader at Securequity, said.

Like other exchange-traded funds exposed to Russia, the iShares ETF has temporarily suspended the creation of new shares, while the London Stock Exchange and Deutsche Boerse have frozen trading in several depositary receipts.

DON’T TOUCH

Trading in U.S.-listed Van Eck Russia ETF, meanwhile, has drawn comparisons to last year’s frenzied buying of meme stocks. Analysts said its sharp fall had stoked interest, much of it driven by retail investors.

A number of social trading platforms in Europe had already halted trading in Russian stocks this week before they were suspended by the LSE, sparking outrage among retail investors seeking to buy what they viewed as bargains.

Social trading brokerage eToro, which froze buy orders on some Russian stocks earlier this week, said on Thursday it could close positions in certain instruments and would do so at the end of business on Friday for Russian retailer Magnit.

Before the suspension, eToro saw interest in Russian exposed stocks rise among its users.

But mainstream investors are staying on the sidelines.

“No brokerage is trading these names anymore as there is no upside … We are under strict rules to not touch Russian equities or bonds,” said Sebastian Marland, equity analyst at Dutch institutional brokerage AFS Group.

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee and Alexander Smith)