Although some observers have questioned the manner in which the poll was conducted, the victory of Vladimir Putin’s United Russia party in the recent parliamentary election and the likelihood of his protege, Dmitri Medvedev, becoming president in March 2008, have improved the risk-reward balance for investors.

Russian equities have underperformed most global emerging market peers by a wide margin this year due in large part to the uncertainty surrounding the current election cycle. This is not surprising, considering that it marks only the second transition of power since the Soviet Union collapsed more than 15 years ago.