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Opalesque Exclusive: Russia hedge fund survivors ride rising stock markets By Benedicte Gravrand, Opalesque London.

Fund managers are still underweight on Russian securities, despite the MSCI Russia Index climbing 21.8% in April and 28.4% YTD - after a drop of 74.2% in 2008. This is reportedly the best performance among the 23 major markets, as oil surged 43% and the rouble gained around 12% against the dollar. Today, US$1 trades for 31.2 RUB.

But that the rouble has depreciated by about 30% against the U.S. dollar since July 2008 (IMF) and stocks fell by about 75% last year may have scared quite a few investors away, and has certainly affected neighbouring countries which are dependent on remittances. Although the recent currency rebound may also affect the competitiveness of non-energy businesses in Russia and risk pushing the country back to a "boom-bust cycle," as Renaissance Capital, an investment bank focused on the emerging markets, told Bloomberg.com (see article below).

So Russia is not out of the woods yet, as fundamentals such as changing oil prices, slow economic growth, government budget being spent on repairing banks and economy, all may contribute towards a precarious environment for a while.

According to the Economist ......................

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