Russia’s outflows were significantly lower than those from China, but comparable to the level of inflows into India and Brazil.
Russian fund outflows appear stable, following a 16-week run of outflows dating back to late June.
Fund flows have thus far not reacted to the protests in Moscow.
We do not think that the deterioration of support for the United Russia party was entirely unexpected, though the extent was clearly underestimated
. For example, a Levada Centre opinion poll before the vote suggested United Russia would lose 65 seats in the Duma, compared to the 77 seats the party ended up losing (granted, on suspect figures).
However, thesize and duration of protest demonstrations in Moscow and St. Petersburg seems to have taken the Kremlin by surprise
. Nevertheless, we think investors should not fear a protracted period of civil disobedience, or sudden regime change
. Though United Russia and Prime Minister Putin will certainly be unsettled by popular reaction to the official election results, and parliamentary politics will doubtless be more fluid in the next Duma, we do not think this precludes the Kremlin from advancing its reform agenda. Nonetheless, with large demonstrations planned in Moscow for Saturday (10 December), we expect the market to remain cautious in the near run
Tom Mundy, Otkritie Capital