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'I'd rather own Russia than Apple': Pro

I'd rather own Russia than Apple: Pro
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I'd rather own Russia than Apple: Pro

Russia's MICEX Index looks cheap after falling dramatically this year and could be a good investment compared to holding shares of the technology giant Apple, Paul Gambles, managing partner at the financial advisory group MBMG Group, told CNBC.

"You've got to look at valuations," he told CNBC Monday. "To me, at those sorts of prices, it's starting to look like there's a - speculative admittedly - high risk opportunity."

"There's a play on Russia just because of the pricing. I'd rather own Russia than own Apple, frankly."

Gamble's comments come after a Bloomberg report back in November that stated that an investor who owned the whole of Apple would be able to sell it, purchase the entire stock market of Russia, and still have enough change to buy every Russian an iPhone 6 Plus.

The Moscow index is down 3.9 percent so far this year following Russia's annexation of Crimea in March and the subsequent sanctions against the country from the West. The index could have performed even worse had it not been for the fact that it is denominated in the Russian ruble which has slid on the back of falling oil prices. Russia's RTS Index - which is denominated in U.S. dollars - is down 48.6 percent year-to-date.

"I think there is potentially some upside. Maybe it can go down further but the idea that the ruble is going to stay at these levels forever, that Russian stock prices are going to stay at these levels forever, I just don't buy that. I think there is some scope for seeing some sort of a rebound," Gambles added.

"I'm not saying it's a buy and hold. But I think get in, try it."


A stock price index graph shows plunging stock prices on an electronic information screen at the headquarters of the Micex-RTS Moscow Exchange, Russia's benchmark stock index, in Moscow, Russia, on Monday, March 3, 2014.
Andrey Rudakov | Bloomberg | Getty Images

The market capitalization of the MICEX currently stands at 20.40 trillion rubles or $350.14 billion, which . The Cupertino, California-based company has rallied 40 percent this year with the release of several new models and its long-awaited Apple iWatch.

The price-to-earnings ratio - an important metric used to gauge stock valuations by some analysts - is 17.38 for Apple, according to data from Reuters, and an average of 5.97 for the MICEX. A lower number is seen as a better investment by many equity analysts.

Brian Coulton, the global emerging market strategist at Legal & General Investment Management, predicted some more near-term pain for Russia but said that the outlook might brighten next year. Western sanctions placed on the country will expire next year, he explained, adding that these wouldn't necessarily be extended.

"If there's some progress geopolitically next year...that would ease some pressure on the capital account," he said. "This is not last chance saloon."

Manik Narain, the head of emerging- market currency strategy at UBS, said the current capital outflows from Russia and expectations of a recession for the country next year meant he was not comfortable with growth-assets like equities.

"It's a very, very uncertain picture for them...(there's) no strong backstop," he told CNBC Monday, adding that the asset class that made the "most sense" was Russian sovereign credit default swaps (CDS) - a derivative that tracks the health of a country and the probability of it facing a debt default.

Disclosure: MBMG Group has recently invested in an exchange-traded fund (ETF) that tracks Russian stocks and has clients that have also invested. Paul Gambles does not have any personal holdings in this ETF and has no position currently on Apple's shares.