Russia 2H10

Half-Time Report
Expect More Action In The Second Half

July 2010
James Beadle

Investment Summary

Russia's economic situation has improved steadily in 2H10, while it's equity market
has held its ground, and debt has performed well given the increase in sovereign
worries globally. Yet, growth and financial market performance have fallen short of
expectations, despite sharp disinflation. Looking forward, weaker than expected
growth may be exposed to the risk of a global economic or financial shock. Investors
preparing for a sharp double dip, continued deflationary pressure or an uncontrolled
sovereign default will want to avoid Russia as they avoid other risk assets. But for those
expecting a less catastrophic second half, Russia looks increasingly attractive.
Accelerating growth and reform momentum are likely to bring strong, if volatile
returns over the remainder of the year.
Russia 2010 – Worth A Tactical Look

About the Author

James Beadle is an investment professional with more than
eight years of experience working in and around the former
Soviet Union.

A British national, he holds and MBA from Barcelona’s EADA,

and an MSc in Financial Engineering from the International
University of Monaco.

Since first visiting Russia in 1999 he has worked in sell-side

equity research, as a consultant for the OECD, as a journalist
and as a hedge fund manager.

From 2006-09 he served as chief investment strategist for Pilgrim Asset

Management, where he co-managed $250 mln in funds and individual accounts.

As the manager of the Pilgrim Russia Investment Fund and the Pilgrim Pacific Fund
he successfully outperformed equity benchmarks and most of his peer group. He
stepped down from direct fund control in July 2008 (before the market collapsed
during the war with Georgia) when fund principals rejected his call to liquidate market
positions. The Russian market went on to fall
another 75%, bottoming in March 2009. Russia Focussed Track-Record
PRIF* Vs RTS Index
James is currently based in Vilnius, Lithuania, 160
from where he serves Russian and international 150
140
clients with emerging and global market 130
120
strategy. 110
100
90
- jamesdbeadle@yahoo.co.uk 80
70
60
Nov-06

Nov-07

Nov-08
Oct-08
Oct-06

Oct-07
May-07

May-08
Mar-07

Mar-08
Jul-07

Sep-07

Aug-08
Sep-06

Feb-07

Aug-07

Feb-08

Jul-08

Sep-08
Dec-06
Jan-07

Apr-07

Jun-07

Dec-07
Jan-08

Apr-08

Jun-08

Dec-08
RTS PRIF

* PRIF continued to trade after July 2008, when James stepped-down

as manager after making a market-wide sell recommendation.

Nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy securities. Prospective investors
should review the appropriate offering memorandum and subscription documents, and consult with their own counsel and
advisors as to all matters concerning investment in Russia.

2
Russia 2010 – Worth A Tactical Look

Contents

Introduction...............................................................................................4
Economic Situation...................................................................................5
To The Present......................................................................................6
Economic Policy........................................................................................6
2010-2011 Policy & Planning.................................................................7
Market Performance..................................................................................8
Global Play.............................................................................................9
Domestic Opportunities........................................................................11
Political Progress....................................................................................11
Khodorkovsky & Reform.......................................................................12
Old Guard Challenge...........................................................................13
International Relations, The WTO........................................................13
Conclusion..............................................................................................14

3
Russia 2010 – Worth A Tactical Look

Introduction
Year-to-date, Russia's economic growth and financial market performances have
been rather lacklustre. My strategic call for the year – that Russia is a tactical buy for
2010 – is on track, but moving slower than some might have hoped.
Ideally, this stacks impressive gains for the second half of the year, and indeed, on
most fronts Russia looks more exciting for the next six months than it has proven
year-to-date.

Chart 1: RTS Index & RTS Sector Index Performance (%, YTD*)

* As of 22 June 2010. Bloomberg data

The caveat will be global risk, which has arguably been the key burden on equity
performance in 1H10. As long as developed economies are tottering on the abyss,
torn between fiscal strains and fears about withdrawing government support, we are
destined to live in a binary world of extreme risk concerns.
A discussion of the global outlook is beyond the scope of this report (but can be
found in my weekly Outlook & Review), so suffice it to say that investing in any
healthy growing market these days requires several assumptions:
– That global deflation and depression are averted;
– That no major sovereign default in an uncontrolled fashion; and/or
– That healthy well-positioned emerging markets will avoid contagion.
The probability of these outcomes (particularly the latter) is, to the mind of this
investor, far from certain. But, assuming that the global macro environment doesn't
collapse (it is certain to prove shaky, but Russia investors are used to volatility) then
the case for going into, or staying in, Russia remains strong.
In fact, as this report will highlight, Russia's disappointing performance in 1H10
makes it a more attractive play for 2H10 – provided that global risk sentiment holds
steady. Russia's 2010 full-year growth outlook remains positive, and most of the
growth is yet to come.

4
Russia 2010 – Worth A Tactical Look

Economic Situation
The key story for 1H10 has been disappointing GDP in Russia. After a horrendous
2009 (-7.9% GDP YoY), Russia came into 1H10 with a very attractive base effect,
national and international momentum and stronger than expected oil prices. With
such a positive backdrop, many expected Russia to experience a healthy bounce.
Not so, as the chart below shows, GDP has struggled to maintain positive
momentum, despite sharply declining inflation.

Chart 2: Russian GDP* Vs CPI, Percent Change, YoY

As Measured by the VTB/Markit GDP Indicator

CPI – Bloomberg data

So, what has caused the economic disappointment? As the following charts show,
many key variables – including industrial production, wages, spending (and
employment) – were indeed healthy throughout the period.

Chart 3 & 4: Wages Vs Retail Sales, Industrial Production, Percent Change YoY

Additionally, the government has been pursuing expansive policies. Falling inflation
and sustained oil prices have allowed the central bank to lower interest rates, while

5
Russia 2010 – Worth A Tactical Look

the cabinet has pursued loose fiscal policies, not least of which was a 45% hike in
pensions.
Although conclusive quantification is still difficult, we can point to a number of factors
that have contributed to disappointing economic performance:
– GDP Time-Lags. Many of the positive parameters observed – such as industrial
production, do not automatically lead to real-time GDP growth;
– Investor & Consumer Confidence. The severity of the economic crisis hit the
Russian population very hard, not least since it was blind-sided by the government,
which invested so much energy communicating that Russia was not exposed to the
global recession and would not suffer.
As a result, and perhaps in line with global stresses, both businesses and individuals
have been reluctant to resume their pre-crisis levels of activity.
– Loan Growth. Perhaps most important, the government's efforts to force lending
through state-owned banks has struggled. The drivers of poor loan growth are of
course very controversial and go to the heart of any recession – are banks being
over-cautious or is there are dearth of good lending opportunities?
In the case of Russia, it is most certainly blend of both, but the lending outlook is far
brighter than recent history. Not only has Russia averted the much-feared second
wave of bankruptcies that so many expected, but interest rates are now getting low
enough to attract a broad range of borrowers.
For many years, Russia has struggled with high costs of capital: growth was break-
neck, but with such high inflation it had to be. Admittedly, inflation and interest rates
are unlikely to fall far from here, and the economy remains very inefficient, but the
current interest rate dynamic should bring a new generation of borrowers to the
market – large corporate (invariably natural resource-based) crowding of the credit
market is easing.

To The Present
Macro performance may have disappointed in 1H10, but the period ends with a
sunny outlook. Finally, as the spring has turned to summer, and the macro dynamic
has picked up. Not before time. In fact, very few economists have revised down their
2010 outlooks, and while the annualised growth estimate for GDP was only 2% for
May, the outlook for the full year remains considerably better – in the 4-5% band.
Throughout 2H10, Russia should experience rapid economic acceleration, as the
recovery kicks into gear, spurred by lending growth, seasonally lower inflation and
resurgent confidence. This Fall, unlike in 2009, Russia's economy is unlikely to be
significantly affected by economic weakness in the developed world (catastrophic
events notwithstanding).
In short, current dynamics are the best of the year, and the outlook is for continued
improvement.

Economic Policy
Russia's disappointing economic growth in 1H10 has not come through lack of
government effort. Ever the 'democratic' populists, the incumbent administration has
thrown the kitchen sink at turning around its economy. Efforts have proceeded on two
fronts, with separate battles waging on short-term and long-term issues.
The prime minister, in his executive capacity, has been more closely involved with
tackling short-term questions. Be it hiking pensions or checking retail store prices in
“spontaneous” visits, the ever-active prime minister has sought to portray himself as
being out on the street, sharing the crisis with Joe Public and fighting on his behalf.

6
Russia 2010 – Worth A Tactical Look

In many nations, and with many leaders, the disappointing results might have led to
declining popularity, but there is little sign that Putin's support has weakened. There
are good reasons for this:
– Foremost, the majority of Russians know which politician they are supposed to
favour, and when asked they invariably remember who to name. Putin's popularity
has always been part-myth;
– Russians also have an impressive living memory of crises, and they certainly
recognise that the current down-turn is going better than many before it. With good
reason they credit this to the incumbents. We may contest the suitability of many
policies, but the fiscal prudence of the last ten years has paid off amiably. Bluntly put,
Russians are (still) used to far worse.
President Medvedev is driving the long-term growth perspective, with a focus on
Russia's imbalanced economy, and the need to diversify away from natural
resources. His efforts are best exemplified by his recent visit to Silicon Valley to drum
up interest in Russia's technology park projects.
Many argue that the state cannot force innovation and creativity. True, but if the
project were pursued professionally enough, it would grant sufficient freedom.
Unfortunately, freedom is unlikely to become a common-place word in Russia in the
near-term, particularly while Vladimir Putin holds active office. The dual leadership
strategy neatly ignores the incongruity between the two men's policies. And this
strategist, at least, believes that Russia is unlikely to lure the level of investment or
international support it deserves as long as Putin and his ensemble remain publicly
engaged.
But the president's efforts look increasingly sincere, and determined. Russia reform is
gaining subtle momentum, and will not be easily derailed. Ironically, Putin's presence
is a pre-requisite to protecting Medvedev and his goals. But, in stark contrast to 2008
sentiment, if Putin were to return as president under the current dynamic, the market
would probably react negatively.

2010-11 Policy & Planning

Best efforts aside, Russia is presently pursuing policies that are as aggressively
optimistic as ever. Perhaps because policy makers are ill-equipped to cope with the
sharp binary risk environment that we find ourselves in. As a result, after years of
conservative oil price expectations, budget forecasts of oil prices now price-in healthy
global growth for the foreseeable future. For the first time in many years, budget oil
price expectations exceed the futures curve.
The concern is that Russia growth can no longer rely on a rising tide. While the
president's long-term diversification goals capture this essence, the government's
budget planning does not.
A recent review by the IMF identified several concerning dynamics in Russia's post-
crisis policies. The non-oil deficit is still on an upward trajectory, and much of the
increase is of a permanent nature.
The flip-side of this is that it adds emphasis to the need for structural (bureaucratic,
pension age, taxation) fiscal reform. Unfortunately, there has been little effort on this
front to date, nor is there likely to be until the administration feels that it has really
sowed the seeds for economic diversification – a multi-year project at best.
It would be unfair to paint a bleak picture though. While Russia's government should
pay closer attention to it's non-oil deficit, the reality is that it continues to draw in
massive revenues from natural resources.
I would be among the first to suggest that populist policies to democratically
underwrite autocratic control are rapidly squandering Russia's great natural wealth.

7
Russia 2010 – Worth A Tactical Look

That said, it is hard to argue that Russia has not managed its cash-flows astutely (if
not economically optimally).
It is true that this has largely been through luck – populist measures were often
introduced well ahead of commodity price improvements. But the reality is plain –
Russia faces nothing like the kind of fiscal or debt strains that are pressuring
industrialised nations, and fiscal management could have been far worse. This is well
reflected in its bond price dynamics, which have impressively avoided contagion and
panic thus far in 2010.

Market Performance
The two charts below demonstrate the conundrum that is Russia investing. Chart 5,
showing weekly returns, demonstrates that the broader Russian equity market
remains tightly correlated to oil prices. Yet, Chart 6 demonstrates that performances
have become more divergent between sectors.
In theory this is very good news, as it demonstrates that there are increasingly strong
opportunities for performance in Russia that are not directly oil correlated. While this
is welcome news, several caveats should be appreciated:
– The non-commodity market is relatively small, both in terms of total market
capitalisation and free-floating capitalisation, many stocks are illiquid;
– In part due to their scarcity, such companies also tend to be more richly priced;
– Also due to their relative supply/demand characteristics, non-commodity
companies are often exposed to greater corporate governance and transparency
risks.

Chart 5: Front Month Oil Vs RTS, Weekly Chart

2000 100
1500 80
60
1000
40
500 20
0 0
04/10/2009
05/08/2009
06/05/2009
07/03/2009
31/07/2009
28/08/2009
25/09/2009
23/10/2009
20/11/2009
18/12/2009
22/01/2010
19/02/2010
19/03/2010
16/04/2010
14/05/2010
11/06/10

RTSI WTI Front Mth

Bloomberg data

8
Russia 2010 – Worth A Tactical Look

Chart 6: (As Chart 1) Sector Index Performance

As of 22 June 2010, Bloomberg data

For several years now, the Russian government has sterilised oil income through
taxation, theoretically reducing the economy's direct correlation to oil prices. It might
seem odd then that the benchmark equity indexes are so closely correlated to oil
prices. There are two reasons for this:
1. The indexes remain dominated by commodities stocks, with oil & gas, and
metals and mining making up nearly 70% of the RTS Index. Despite high taxation,
these companies do not suffer when commodity prices (which are all closely
correlated in the current bipolar risk environment) rise.
2. Taxation diverts revenues, but does not remove them entirely from the system –
Russia's money supply is closely related to oil prices. Hence, the gains of high
commodity prices continue to feed economic growth.
Of course, we could add the third reason, that financial assets now fall sharply into
two groups – risky and “riskless.” By such an analysis, commodities are now
positively correlated with equities on a global basis.

Global Play
Revisiting Russia's valuation vis-a-vis its BRIC peers (Chart 7 below) it quickly
becomes clear that Russia continues to lag. In part, this represents the market's
disappointment with 1H10 economic performance – and in part it represents the
global risk-off trade that has been under-way for most of the second quarter.

9
Russia 2010 – Worth A Tactical Look

Chart 7: BRIC Forward P/E Estimates

35
30
25
20
15
10
5
0
01/01/2008
18/02/2008
06/04/2008
24/05/2008
11/07/2008
28/08/2008
15/10/2008
02/12/2008
19/01/2009
08/03/2009
25/04/2009
12/06/2009
30/07/2009
16/09/2009
03/11/2009
21/12/2009
07/02/2010
27/03/2010
14/05/2010
RTSI$ Index IBOV Index SENSEX Index SHCOMP Index
Bloomberg data

By contrast (moderate 2Q dynamics notwithstanding) Russian debt pricing has made

more progress – in large part due to the April debt issuance. Not only were the 5s
and 10s tightly priced (representing lower political and inflation risks), but their
issuance served to support liquidity and renew interest among international
institutions (equally, increased institutional interest helps to reduce political risk as
Russia won't want its bonds to be dumped in response to unwelcome geopolitical
issues).

Chart 8: CDS Spread Comparison – Closing the Gap

5
4
3
2
1
0
01/01/2009
02/02/2009
06/03/2009
07/04/2009
09/05/2009
10/06/2009
12/07/2009
13/08/2009
14/09/2009
16/10/2009
17/11/2009
19/12/2009
20/01/2010
21/02/2010
25/03/2010
26/04/2010
28/05/2010

Russia/China Russia/Brazil Russia/India

Bloomberg data

At the macro level, then, Russia's bonds are leading its equities in closing the gap to
BRIC peers. Assuming a stable global environment, Russia ought to see its equity
market outperform over 2H10.
The key risk to such an outlook is that it has – for most of the current year – been a
top pick GEM for many international investors, increasing the risk of a capital moving
out rather than into the market. Yet the sense remains clear, investors are long
Russia with good reason. Provided the environment holds together, few markets look
so well geared for economic and financial market improvement.

10
Russia 2010 – Worth A Tactical Look

Domestic Opportunities
Given the divergence in sector performance already observed in 2010, it is also
worth taking a moment to look at opportunities from a domestic perspective.
Commodity Companies. Russia's commodities companies continue to enjoy
buoyant pricing and recovering exports, as well as increasing domestic demand. Oil
& Gas companies again face rising taxation as the government has confirmed plans
to remove tax breaks introduced to stimulate activity in the face of the global financial
crisis.
Although we may be at something of a cyclical peak in metals companies, miners
and fertilizers continue to look attractive. Long-term, thanks to ambitious domestic
development plans, the whole commodities complex should prove resilient and
structurally attractive, conditional on the global economy not collapsing.
Consumer Story. The real interest in Russia remains access to the consumer, who
is such a major beneficiary of wealth distribution from oil taxation. There are several
ways to play this theme – directly through retail companies, which are highly valued
and highly volatile, through telecommunications companies, or through banks.
While highly valued, selective consumer companies continue to provide opportunity
for those bold enough to play them. Telecoms (especially the now integrated
mobiles) and banks offer less volatile potential for gains, as both sectors continue to
repair themselves post crash.
Utilities. Russia's electricity reform is a tale as long and as complex as its post-
communist economic development. With the crucial privatisation phase finally over,
focus has been able to move onto economic pricing transition and investment.
Russia urgently needs to replace and augment most of its electricity complex, few
areas offer better investment potential.
Industrials. Russia's industrial companies remain very poorly appreciated, in large
part due to their lack of innovation, poor processes and outdated products. As Russia
moves closer to WTO accession, and the president's reform agenda picks up
momentum, it is reasonable to expect improved opportunities in the industrial sector.
Of course, they should come with increased transparency and better corporate
governance.
Organic development potential is very limited, but the sector is worth watching for
international deals, event trades and genuine turnaround stories.

Political Progress
The cornerstone of my 2010 investment analysis was how Russia's political
environment would evolve over the year. Russia entered 2010 with a very weak
international reputation and, arguably, the largest risk premium among major
emerging markets. President Medvedev had made it his goal to reduce this premium
by reforming the country, tackling corruption and bureaucracy.
Some progress has been made, but unfortunately my prediction that reform would fall
short of the scope needed to put Russia on a healthy and sustainable investment
path looks accurate.

Dual Leadership – Successful Tandem, Shifting Roles

Gossip about rifts between Putin and Medvedev over how to manage nation have
subsided for now, largely as the prime minister has adopted a new pragmatism in his
communications, demonstrating active support for Medvedev's campaign to attract
international investors and build a friendlier image.

11
Russia 2010 – Worth A Tactical Look

Putin has remained the hard man of Russia, and is unquestionably still the key policy
setter. Yet, it is positive to see that he has clearly adapted to his executive role –
some asides, such as Ukraine, notwithstanding – and has not openly conflicted with
Medvedev over the presidential responsibility. Overall, the tandem is working well.
Yet, there also appears to be a gap opening between the two. Dmitry Medvedev fully
owns the campaign to clean up Russia (and its image). Little material progress has
yet been made on attracting investment, but it is clear that the president is beginning
to entrench himself. If Putin were to return to the top job in 2012, the market reaction
would likely be negative (in stark contrast to the way it responded to his becoming
prime minister).
Investors increasingly see Medvedev as having the progressive vision required to
move Russia forward, while Putin appears to favour maintaining a reputation for
being the tough guy that got Russia out of a rut. At this early stage, the probability of
Putin returning to the presidency is waning.

Khodorkovsky & Reform

This reputation divergence is perhaps best typified by the ongoing Khodorkovsky
trial, which has become a litmus test of reform progress. The second trial of Russia's
former richest man, on charges of stealing oil, is no less of a legal farce than the
original trial of tax evasion. Old Russia hands will remember nostalgically how the
judges repeatedly fell asleep throughout the first trial. The current “show,” includes
events such as the prosecuting lawyer declaring that “it is impossible for the
prosecution to lie.”
Entertaining as this farce may be, it should be remembered that it comes at cost to
Russia's reputation. So long as foreign investors are curious about the fate of the
man who stood up to the Kremlin, so the fairness of his trial will be seen as a test of
Russia's political evolution. Here there are some guarded grounds for optimism, the
defendants have been allowed to cross examine a stream of former officials, not only
those (Mikhail Kasyanov) who have fallen out with the government, but also some
(Victor Khristenko) that remain within it.
The outcome? Unsurprisingly, all claimed to be unaware of any theft of oil. (How
could they not? But such an outcome serves the defendants well.) Several went on to
say that they would have known about such thefts and/or that transfer pricing was
entirely legal and standard business practise.
This amounts to an amazing demonstration of freedom of speech, such as would
have been unthinkable under Putin's presidency. It equally demonstrates that public
difference of opinion is acceptable once more. The greatest change that Medvedev's
presidency has overseen (courtesy of the financial crisis) is a resurgence in
discussion, after a long era of passive acceptance.
And yet, as I noted in Worth a Tactical Look, reform progress is slow and painful, and
unlikely to reach the scale necessary to ensure sustainable long-term economic
development. A cynic might argue that Medvedev's liberalism is only permissible as it
is backed by Putin's firm hand – discussion is one thing, but the executive decisions
are unquestionable.
More pertinently, the Khodorkovsky trial serves to demonstrate the limits of
Medvedev's progress. While we can celebrate free speech, it remains highly
improbable that Khodorkovsky can expect a fair, independent and honest hearing.
Anything is possible, but he is likely to remain in prison for a considerable time.
Freedom of speech is one thing, but impartial judiciary is a far bigger challenge.
The Khodorkovsky case marked a shift toward autocracy and nationalism in Russia,
it remains a curious measure of where the nation is; as a result, this second trial will
have a direct impact on Russia's risk premium.

12
Russia 2010 – Worth A Tactical Look

Old Guard Challenge

Closely tied to the Khodorkovsky case, the campaign to reform Russia remains
gravely inhibited by presence within the ruling elite of the same old guard that ruled
the roost during the politically aggressive years of the Putin administration.
It is reassuring, but telling, to note that individuals such as Igor Sechin are moving to
improve their public image. Yet, as the recent departure of Dmitry Rybolovlev from
Uralkali shows, elements of kleptocracy and vertical control persist, to the detriment
of a value accretive business environment.
Medvedev is believed to favour his new, more liberal team, and it is widely felt that
the siloviki are struggling to retain their former influence. But, they certainly won't
fade out overnight, and of course they retain considerable influence over their leader
and benefactor Vladimir Putin.

International Relations, the WTO

Progress is also being made on the international stage. Russia is succeeding to
improve relations with a broad range of international partners, even whilst retaining
its sense of individualism. The agreement to impose sanctions on Iran represents not
only the success of the Obama administration in pursuing a constructive international
approach, but also a shift in engagement policy on the part of the Russians.
Russia can be expected to continue its constructive bridge building, while maintaining
its own policy identity. In part, this is because relations had fallen to such low levels.
Political progress will produce positive headlines, but little practical benefit to Russia.
This is largely because economic relations remain ahead of political links, the
politicians are playing catch-up, and it will take an extended period for their efforts to
bring material economic improvement.
One of the biggest calls of my 2010 strategy was that Russia was more likely than
ever to accede to the WTO. Progress on this front is clear, but not without its own
absurdity. With much of the negotiation effort completed, Putin – who has always
been more guarded in his rhetorical eagerness to join – shocked all involved by
announcing that Russia would only accede along with its new customs union
partners, Kazakhstan and Belarus. The complications were obvious, leading to
speculation that either this was just one more stalling tactic, or that the logistics of
fitting the customs union and WTO together had simply been misunderstood.
Russia investors everywhere must have breathed a sigh of relief when this
impractical condition was dropped, and now it appears that the customs union is
more likely to fade away than the WTO accession. (Not least in the face of another
bout of gas supply conflict with Belarus.)
Going forward, the WTO deal remains a huge challenge. The Obama administration
will certainly take a pragmatic approach (despite his earlier anti-free trade rhetoric).
Yet, the political balance is tough – Russia needs to show enough commitment to
overturn the Jackson-Vanik amendment, without surrendering too much of its own
interest. Medvedev has also shown pragmatism on the political stage though, so the
chances of success remain very good.
Russia will not formalise its accession to the WTO overnight – not least it will take the
US politicians time to deal with the question. But it remains probable that a
framework agreement will be announced in the near future. As previously noted,
such a deal would not bring the level of benefits enjoyed by, say, China, on its
accession; but it would contribute considerably to a reducing legislative risks, and
open the door for increased foreign investment.

13
Russia 2010 – Worth A Tactical Look

Conclusion
Steady as she goes. Russia's economy and financial markets have underperformed
high expectations in 1H10. There is now a risk that global crises will knock this weak
recovery off track, but the overall perspective is more optimistic. Russia is
successfully pursuing the reform path that I highlighted in my outlook for the year.
And at least this is well on track, if not moving ahead of optimistic expectations.
Economic growth will strengthen in 2H10 and, absent acute global risk waves,
financial market returns should be impressive. Russia is well-positioned, both
compared to its peers and the developed world. Going forward, risk premiums are
likely to continue declining, and company fundamentals are likely to rise.
More detailed advise on security valuation, selection and timing is available on an
individualistic basis.
- James

14
Russia 2010 – Worth A Tactical Look

James Beadle
jamesdbeadle@yahoo.co.uk
+370 643 33238
+44 754 5281 587

15