Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Ban on Russian Investments Would Hurt Missouri More Than the Kremlin

Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Ban on Russian Investments Would Hurt Missouri More Than the Kremlin

Article excerpt

Russia's stock market may not be the world's most stable, but it was one of last year's best performers. Rising oil prices pushed the country's main index up 51 percent in dollar terms.

Maybe Missouri's pension managers should be congratulated, then, for having exposure to such a hot market. Instead, state Sen. Maria Chappelle-Nadal, D-University City, wants to force them to sell.

Her bill, which would prohibit public investments in any company doing business in Russia, follows an unfortunate Missouri tradition of using pensions to fight political battles.

Last year the demagoguery came from Sen. Eric Schmitt, a Republican who's now the state treasurer. He wanted to ban pension investments in companies that did business in Iran and Sudan.

Schmitt didn't like President Barack Obama's nuclear deal with Iran. Chappelle-Nadal is upset about Russia's apparent role in hacking the Democratic National Committee's emails.

Apparently some of our lawmakers weren't paying attention in civics class. In our federal system, the U.S. government handles foreign policy. States are supposed to stick to matters within their borders.

Obama punished Russia for the hacking scandal, but his sanctions did not include an investment ban. U.S. citizens are free to buy stuff like the VanEck Vectors Russia Small-Cap exchange-traded fund (up 105 percent last year), and pension funds should have the same flexibility.

However politically appealing an investment ban might sound, such a move wouldn't hurt Russia.

"The value of an investment is determined in markets by the value of its future cash flows, and if one pension fund divests, someone else will purchase," says Jeffrey Brown, a finance professor at the University of Illinois. "Yes, there may be a short-term effect on stock prices, but not a long-term effect from the mere act of one investor selling. …

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