Russia change is slow

East Capital’s latest Macro Monitor report into Russia and other CEE markets suggests change is coming, albeit slowly.

Marcus Svedberg, East Capital’s chief economist (pictured), notes the downward trajectory of approval ratings of both president Medvedev and prime minister Putin. He adds in the latest Macro report that both men are under pressure to show results from the oft-repeated modernisation drive, including associated economic and political reforms.

Now into election season, Russians are also looking for wider splits between the two. Svedberg notes the recent manifesto focused on corruption from Medvedev, and the subsequent removal of deputy prime minister and Putin ally Igor Sechin.

“Although I still do not believe that the initiatives signal a split in the tandem, or that the election will be truly competitive. More important, in my view, is the fact that both Medvedev and Putin have seen their approval ratings fall steadily this year, albeit from very high levels. They simply need to show the increasingly disillusioned Russians that they are fit to lead the country for another term,” Svedberg writes.

Still, Russia looks like a beacon of democracy compared to Kazakhstan, where president Nursultan Nazarbayev won 95% of votes cast on 3 April – after two decades in power.

Elsewhere, the Macro Monitor suggests Baltic markets are positive but rather divergent so far this year.

Central European markets continued to perform strongly. The Polish and Hungarian markets gained 10.6% and 10.4% respectively while the Czech market was up 6.5% in dollar terms.

Southeastern European markets provided a mixed performance in dollar terms, underscoring the importance of currency in defining returns.

And further afield, the report notes that Chinese and other Asian markets such as South Korea did well over the previous month off the back of strong underlying economies.

Click here to read the full May Macro Monitor

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