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When Russia’s Bad Image is Good

The most common complaint of Russia obsessives is that the international media seems to often present the country in such a negative light, creating a perception that is entirely out of whack with the reality of day-to-day life.  But some market analysts delight in the country’s bad-boy rep, which scares off the timid and leaves greater opportunities available to the intrepid and risk-insatiable investors.  Here’s a weird one from Reuters:

“Everybody hates the damn place,” said Jim O’Neill, the recently named chairman of Goldman Sachs Asset Management. “So it takes a lot of bad news for Russia to disappoint.”

But O’Neill told Reuters Insider TV he was intrigued by the notion that Prime Minister Vladimir Putin and President Dmitry Medvedev may be making progress on tackling some of Russia’s big structural challenges.

Wow, progress?  That would be the first we have heard of it.  But not everybody is drinking O’Neill’s Kool-Aid.

Rival Moscow brokerage Troika Dialog is prosaic, focusing on the risks that Russia will prove unable to deliver on economic modernization and reform.

“The most likely scenario for Russia is a sort of cynical muddle-through in the medium term, which will enable the country to deliver around 4-5 pct economic growth, not bad compared to many other countries but more moderate relative to the past decade’s results,” it wrote in its latest Economic Monthly.

Of course it goes without saying that 4-5% GDP growth is still very robust, and sufficiently attractive to keep institutional portfolios looking for exposure in Russia, and less likely to get too knotted up over the democracy deficit so long as the returns keep coming in.  Everything just points to more of the same this fall.