In fashion, as in finance, things move quickly. It is clear from Moscow’s ubiquitous designer handbags and expensively tailored suits that the 1990s are but a fading memory for the devoted fashionistas of the new millennium.
But in finance, the 1990s are still very much at the front of people’s minds. For those outside Russia looking in, the association between the past and the present is very strong. That decade is a time remembered for lawlessness, corruption and chaos of astonishing proportions in Russia. Some in the West have not revised their opinions to reflect the stability in which Russia now basks, or any of the other changes that have occurred since then.
For those inside Russia, the memory of the 1990s is even clearer, but so is the perception that things have changed. The nine years since the turn of the century have seen a remarkable improvement in their lives – in terms of the money in their pockets, their access to goods and their safety in the streets.
Politics remains a rub, but only, it seems, for those outside Russia. From the inside, “democracy” seems a puzzling irrelevance; Russians seem genuinely enthusiastic about the outcome of elections that were widely perceived to fall short of internationally accepted “free and fair” standards.
Recent years have seen a rapid expansion of Russia’s financial markets, as well as in the normalisation of the business culture in the country. Anecdotally, older Russians’ memories – both bad and good – of the communist years have been increasingly sidelined in the workplace. Younger generations have often worked or studied abroad, and have helped pollinate Russian corporations with foreign ideas of how business is done. This has been supplemented – though to what extent will remain a matter for debate – by some level of capitalist zeal being imposed on the country from the top down.
The success of Russia’s various financial markets is a testament to the progress the country has made in liberalisation. It has a rapidly evolving bond market, with almost limitless potential to grow over the coming years. Its equities market has equal potential, having almost doubled in volume from 2006 to 2007. Its loan market is one of the most vibrant in the EMEA region, and although pricing has been hit by problems in the global economy, there is no indication of the market faltering.
The development of the Russian derivatives market gives the other side of this otherwise bright outlook: the country’s legal system, a few tweaks notwithstanding, is a legacy of a previous age, and has not proved fertile ground. But even this appears to be a matter of not if but when, as impediments to the development of the industry are cleared one by one.