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. Last Updated: 07/27/2016

Investor Confidence

The presidential election, possibly one of the most important political events in the history of Russia, has undoubtedly influenced the country's ever-changing financial markets. ... According to recent activity on these markets, investors believe that Yeltsin will remain president for another four years. However, a more important question comes to mind -- namely, will Yeltsin continue his course of economic reform and further develop free-market relations?

After the runoff election, Yeltsin's cabinet will most likely begin to stringently control all state spending and take firm measures to reinforce the federal budget in accordance with International Monetary Fund and World Bank agreements. For government bonds, this means that the Finance Ministry and Central Bank will work vigorously to lower the yields of treasury bills in order to bring down the cost of borrowing on the domestic market. ...

As for stocks in privatized ventures, a Yeltsin victory will provide companies with an opportunity to attract investment, further develop infrastructure and do business on international markets with a more liberal system of foreign trade. ...

Overall, markets appropriately reflect investors' confidence that Russia is on its way to economic recovery. What to expect in the near future? As the treasury-bill market proves, investors expect a stricter economic policy after the runoff election. As for the long-term outlook, the corporation securities market clearly shows that economic growth and a rise in investment is expected in Russia over the next five years.