'The primitive structure of our economy', was one of President Medvedev's keynote complaints in his second annual address, which emphasized the need for technological innovation. The speech was 'disappointing from an investment point of view [...] it was very light on any specific point of action, just a reiteration of what we have already been hearing', comments one strategist. Excessive state involvement in the economy was another point raised: three state corporations, Russian Technologies, Rusnano and Vneshekonombank will lose their status as such as early as next year. The President did suggest that it should be the job of the Foreign Ministry to systematically encourage foreign investments, by reducing bureaucratic hurdles. The economic decline has apparently eased during the last quarter after record lows. Rusal may offer stakes in mines to Chinese companies to contribute to the success ...

First Deputy Prime Minister Igor Shuvalov has pledged not to fire workers from near-insolvent Avtovaz, but to create new subsidiaries employing up to 15,000 people.  Auto sales declined by 51% in the first 10 months of 2009, compared with the same period last year.  At the annual Foreign Investment Advisory Council, Prime Minister Vladimir Putin has wooed foreign investors by concurring with their criticisms about 'excessive bureaucracy'.  The number of unemployed in Russia has begun to mount, having fallen successively for six months.  The Central Bank may buy gold from the state repository, says its First Deputy Chairman Alexei Ulyukayev.  Evraz Group plans to sell as much as $1.04 billion of 10-year bonds, the company has announced.  Coking coal miner Mechel has seen a reversal of fortune, now back to a pre-crisis level of production ...

The Central Bank has cut its key refinancing rate to 10.5%, the sixth such cut since April.  Russia could borrow less than $18 billion abroad next year if oil prices stay high.  Finance Minister Alexei Kudrin has defended BRIC as a 'locomotive of the global economy'.  Apparently Opel will be sending less funds to Russia than initially reported: €170 million rather than €600 million.  Sberbank has insisted that the operations of Opel will not be directly influenced by the government.  Almost 5,000 Avtovaz employees face redundancy, according to ITAR-TASS.  Mikhail Prokhorov has complained that his charitable foundation has been forced to leave the city of Norilsk because of threats from 'feudal lords'.  Billionaire Alexander Lebedev has offered to give away shares in some of his firms to 'big western names' to bring them ...

After a long struggle with local authorities, Ikea will resume its Russia expansion as local officials are beginning 'to follow the different laws that exist' said the Swedish giant's Russia chief.  X5 Retail group has showed that net income has increased by 87% in the second quarter from a year earlier.  The Central Bank says that it may cut interest rates again after inflation remained unchanged last week.  Putin has said that an extra $4.6 billion will be raised for the state budget in 2010.  The Finance Ministry may reduce the amount of state capital that it had planned to issue in OFZ bonds this year.  Peter Hambro Mining, which plans to change its name to Petropavlovsk, increased its first-half profit more than fivefold following rising production.  The Central Bank appears to be tentatively optimistic ...

Stocks swung back into action Wednesday after a two-day retreat as the U.S. Federal Reserve’s optimistic comments at the end of a two-day meeting re-energized investors and bolstered hopes that the recession is finally easing.  The Central Bank’s observation that the economy appears to be “leveling out" was optimistic but its subdued outlook on unemployment and inflation took some sheen off that optimism.  The Fed also announced plans to slow the pace of its program to purchase $300 billion worth of Treasury bonds, adding the full amount will be bought by October.

The 30-stock Dow Jones industrial average finished 120 points, or 1.3%, higher.  The broad S&P 500 index rose 11 points, or 1.1%. The tech-heavy NASDAQ composite advanced 29 points, or 1.5%.  On the New York Stock Exchange 1.23 billion shares exchanged hands and advancing stocks outpaced those that fell five-to-two.

Stocks seesawed after the Fed’s announcement, with

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President Medvedev has ordered an investigation into the financial activities of state corporations such as VEB and Russian Technologies.  The move has been seen as an attempt to reconsider whether the Putin-sponsored powerhouses are really effective.  Out of the CIS nations, Russia is apparently one of the most poorly performing states in economic terms.  Russia's jobless figure has decreased by 6,000 to 2,140,000.  State defense purchases will grow 1.2% in 2010.  The Central Bank has announced a fifth interest rate cut in four months to propel the economy forward.  The IMF, which predicts that Russia's economy will shrink by 6.5% this year, is recommending that the state slash by half its fiscal stimulus and focus instead upon a road map and 'mandatory, bottom-up stress tests of larger banks'.  A recent poll has indicated that young ...

In the New York Times, a special report examines the motivations behind the closure of the 'hell-hole', as one official described Cherkizovsky market: health and safety regulations, a crackdown on vice or revenge for owner Telman Ismailov's lavish opening of the Mardan Palace hotel?  An op-ed piece in the Moscow Times suggests that of the 'conflicting interpretations', the threat the market posed to Russia's light industry is the most convincing.  The Central Bank is considering closing non-bank office located currency exchanges, as an attempt to reduce fraud in independent kiosks.  Moscow real estate prices have continued to plummet, to less than $4,000 a square meter last week. The Finance Ministry says it will sell $20 billion of eurobonds in 2010 in its first international sale since 1998.  The world's largest construction company, Vinci, has signed a $2 billion deal ...

Top bankers have recommended that the Central Bank cut its interest rates by as much as 5 percentage points.  The Economics Ministry has announced that GDP is 9.6% down on this time last year and has warned that at the beginning of 2010 there may be a second wave of the financial crisis.  Apparently the ministry is preparing for a $102.7 billion budget deficit next year and may cut its 2010 sovereign borrowing plans by over 50%, favoring to shore up budget deficit with oil wealth funds.  The Central Bank has made a blacklist of 2,600 bankers who, following involvement in penalized financial institutions, will need special permission to return to executive level in the sector.  Moscow Mayor Yury Luzhkov is intractable on the plight of recently made redundant Chinese workers from Cherkizovsky Market, saying 'it is ...

In the first six months of the year the budget deficit grew to the equivalent of 4.2% of GDP.  The Central Bank has cut interest rates again, for the fourth time in three months.  The Moscow Times has a rather bleak prognosis of the economic situation.  'Russia today often seems to combine the worst aspects of a free market and a command economy' - an op-ed piece in the Washington Post analyzes the unlikelihood of imminent modernization.  ArcelorMittal may sell a coal mine in the Kemerovo region after the local government threatened a takeover.  The Times features an interview with indebted billionaire Oleg Deripaska in advance of a film about the tycoon to be broadcast on the BBC.  GAZ has agreed on plans for restructuring its $1.25 billion debt, but Alfa Bank is dissatisfied with ...

This post is a guest contribution by Dr Mark Mobius, executive chairman of Templeton Asset Management.

Emerging markets surged in the second quarter of 2009 with the MSCI Emerging Markets Index returning 34.8% in US$ terms. Part of this return was due to weakness in the US dollar. A return of confidence in emerging markets, the desire for higher returns and the search for undervalued companies support the markets’ uptrend.

Latin American and Eastern European markets were among the strongest performers during the quarter, while most Asian markets also recorded strong double-digit returns. A rebound in commodity prices and stronger domestic currencies supported markets in Latin America. Asian markets continued to attract significant portfolio inflows allowing markets such as China, India and Thailand to outperform their regional counterparts. In Eastern Europe, Hungary returned 69.7% in US$ terms in part due to a strong forint. Poland returned 37.0% in

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