Investment outlook for Russia.

Opinions on the direction of equity markets in the near and distant future are different. From a regional perspective there is increasing focus on Eastern Europe and especially Russia. Views on Russia are very divided. From optimistic to very negative mood and the fear of further negative developments.

The Russian stock market was one of the most growing in recent months. On the other hand last year ranked among the worst stock markets. Most of experts and analysts point to the fundamental problems associated with the Russian economy, which may adversely affect what is happening in equity markets, the final decree and prospects are generally positive. Negative remains relatively unilaterally oriented economy dependent on commodity prices (especially oil prices), influence of Russian oligarchs. A risk may also be too rapid increase in the stock market in the second quarter of this year.

The positive signal is usually considered high price of oil, the price came back to an interesting value, also re-strengthening ruble, improve cash flow, etc. And last but not least, healthy correction in the stock market, when the Russian stock indices lost almost a quarter of its value from the beginning of June.

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Here are some opinions and predictions for Russian market.

An example may be Mr Nicolas Fitaire, director of Prague's branch of Lombard Odier, who does not believe the power of Eastern Europe, but Russia is a different case: "Russia is experiencing problems after the fall of oil prices and errors in management. Thanks again and a significant recovery in oil prices to reduce the pressure on the ruble, the fiscal balance and the risk of a major intervention in the private sector is now smaller. Although the lowest level increased more than twice the value remains in our opinion the Russian market among developing countries one of the most attractive. After 25% correction, we have increased our involvement in this market, particularly in the field of mining and metallurgy. "

Similar situation also sees Angelika Millendorfer, Head of Emerging Markets Equities at Raiffeisen Capital Management: "The Russian economy declined in the first half by more than 10%. It should be also noted that the price of oil, which is one of the most important factors affecting the Russian economy, is again given the level of around 30 dollars in December 2008. If the price stabilizes around 60 - 70 dollars, we can expect Russia to grow in next year. Industrial output in July have been promising and a further positive factor is the strong stabilization of the ruble devaluation and currency reserves about 400 billion dollars. Improved the access of companies to finance and interest rates also declined from the extremely high values. "

She recommends more focus on certain sectors, respectively. individual companies. Positive prospects for oil and gas companies, in the near future but still a risk that the recession will negatively affect the oil market. Attractive are also some steel companies. Although some companies are not currently in profit, there are still many low-cost steel companies in profit, and may benefit in future from consolidation in the steel market.

According to analysts from Erste Bank the most powerful "weapons" of the Russian stock is market valuation, respectively undervaluation. Capital inflows associated with the potential growth in the commodities market is due to one unilateral economy opportunity but also risk.

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There is one big problem in the long term for Russian economy. This is extremely negative demographic trends, significant decline of population in Russia

In the current development fertility and mortality in the next 40 years the population will decline by almost 30% from the current 140 million to 80 to 100 million. Lack of skilled labor is already reflected now, which together with the forecast decline in the labor force of 1.5 million per year from 2015 will have a very bad impact on economic growth. In 2025 working will be only one fifth of the population in Russia.