The Russian market's inchoate yet potentially revolutionary
political opposition served notice it is not going away, with
another massive demonstration in Moscow on June 12.
[caption id="attachment_63650" align="alignright" width="300"
caption="Protesters begin to fill the Trubnaya Area, Moscow, June
The organizers fell far short of the "March of Millions" they
promised for the holiday commemorating the signing of post-Soviet
But the turn-out, probably 40,000-50,000, came near the numbers
that rocked the nation last winter after a fraud-ridden
parliamentary election ignited the simmering disgust of the
burgeoning middle class with Vladimir Putin's entrenched state
Putin's response to the latest demostration was dispiriting. As
is his habit lately, he laid on some pluralistic rhetoric in a
presidential holiday speech. "Various ideas are now voiced about
Russia's present and future," the leader intoned. "These heated
debates are normal for a democratic country."
But this enlightened line was belied by the police, who raided
the apartments of top opposition activists the night before the
march; their searches and seizures apparently sanctioned by a
spanking new law on protests passed by parliament just a week
The crackdown was not without its moment of comic relief. Cops
ransacking the apartment of Ksenia Sobchak, a popular talk show
host and sex symbol of sorts, announced they had
uncovered more than euro 1 million in cash
, which they duly carted away as evidence. Sobchak explained via
Twitter that she earns $2 million a year and does not trust banks
with her savings.
Ksenia, incidentally, is the daughter of the late Anatoly
Sobchak, the mayor of St. Petersburg who gave Putin his start in
politics in the early 1990s. There's gratitude for you.
Other early events from Putin's third term, which started last
month and is scheduled to last six long years, are less amusing.
One of Russia's top law enforcement officials, head of the
so-called Investigative Committee, had a journalist from
kidnapped and threatened his life in a forest
, according to the paper's editor.
Abroad meanwhile, Russia looks to be doubling down on its
unconscionable sponsorship of Syrian president Bashar Assad,
sending him new helicopter gunships
, according to U.S. secretary of state Hillary Clinton.
In a word, the same old Putin seems to be back. Strictly
speaking, none of these events are part of economic policy, which
Russia's strongman has historically entrusted to a more moderate
and cosmopolitan group of deputies than law enforcement and
diplomacy. Economic aides could doubtless point to various
technical changes afoot meant to advance Putin's stated goal of
making the Russian market one of the 20 easiest countries in the
world for doing business. (It
currently ranks 120th
according to the standard ranking from the World Bank)
What Putin never seems to get is that rampaging police who treat
anyone who crosses them or the government as a traitor are part of
the business environment. More than one Moscow office of a
multinational has been the object of groundless searches by
Kalashnikov-toting thugs in the past. Ham-fisted politics is
certainly part of the negative perception that keeps the Russian
market a least-favored nation for many investors despite its great
wealth of natural and human resources.
For buyers of emerging market shares, the Russian market's
bad-boy image obscures much of the progress made by its corporate
sector, particularly in the domestic consumer industries. A case in
point is Sberbank (
), which had a big bulge in profits last year and
dominates a financial sector where lending is growing by some
That sounds like a good stock. But investors are treating it
just the same as the rest of the Russian market, which is dominated
by oil and gas companies. Sberbank has lost 25% of its value since
March 1, and the Market Vectors Russia ETF (
Exceptional corporate stories may still outperform in the
Russian market. Shares in top cellular carrier Mobile Telesystems (
), have shed a mere 3.4% since March 1 thanks to bumper profits and
anticipated growth in 4G services.
But to the non-specialist investor, the Russian market will
remain a play on commodity prices for some time to come. That is
unless the slow-motion confrontation between Putin and his
discontents accelerates - in which case things could get much