Russia 2010: Worth a Tactical Look

An in-depth report on Russia’s outlook for 2010. Almost one-and-half years after recommending fund liquidations ahead of the market collapse, I am again initiating market specific coverage. Clearly, Russia has performed very well this year, but the recovery to-date has been a global risk play. In 2010, Russia will make changes that will create the opportunity for country specific investment.

Investment Summary
Russia’s under-performance relative to its BRIC peers is justified and well-explained. Yet, it also creates upside potential. Russia is beginning a new development phase, which creates opportunity and makes it an attractive buy for 2010.

The potential for decisive progress is limited and many systematic problems will remain. In the long-term Russia has some serious structural issues to contend with.

In the medium term, things look brighter. Efforts to improve the nation’s investment climate and economic development model will increase interest in Russia, leading a narrowing of valuation spreads in 2010. Russia is certainly not without its risks. A second wave of financial/economic crisis would again punish Russia as commodity prices fell. But, if such a crisis can be avoided, Russia offers very attractive risk-adjusted potential in the coming year.

Download this report: Russia 2010