Russia’s benchmark Micex stock index closed at its highest level on record on Monday as a rebound in oil prices and the continuing punitive low rate environment sent investors scrambling for a piece of what was just two years ago one of the most unloved stock markets in the world.

The index rose 0.5 per cent to 1,977.28, a new closing high, having earlier touched a new record intraday peak of 1,983.10.

It’s the index’s third straight day of gain and takes its gains from its January lows to nearly 23 per cent.

Demand for Russian stocks evaporated in 2014 after the country invaded Crimea in Ukraine and the US and Europe imposed sanctions on Russia and its companies in response. Plunging prices for crude — Russia’s key export — also did little to support sentiment.

But with oil prices stabilising and the situation in Crimea coming to a standstill, investors have been slowing dipping their toes back into Russian stocks. They are drawn by the cheap valuations as much as the need for returns in a world where the value of negative-yielding bonds now stand at $13.4tn.

Still, Russia’s nascent recovery could easily be derailed once again by the flare-up in tension with Ukraine. As Moody’s warned, last week’s military buildup along the Russia-Ukraine border is credit negative for the country.

In the relative calm over the nine months since the ceasefire, Russia’s economy and financial markets began to stabilize, despite the volatility of oil markets. The stability was evident in the ruble’s stronger exchange rate since January, signs of an incipient economic recovery (especially on the supply side of the economy) in the second and third quarters of 2016, increased foreign participation in the domestic debt market, and a virtual cessation of capital flight. Should the military conflict intensify further, Russia’s recent economic gains are likely to reverse.

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