... the hopes of a re-rating of Russian stocks are officially dead. Russia's Ukrainian adventure has shown that it is not only the rest of the world that still views Russia through a Cold War prism: That is how the Kremlin sees itself. Putin has backed up his theatrically menacing exterior with actual force. He acted like the bad guy because, well, he is a bad guy.
Global investors never really bought the illusion that Russia is just a snowier, bad-food version of China or India, or Brazil — and thus deserving of the higher valuations usually assigned to those markets. Now, investors' doubts have been confirmed.
Today, Russia suffers from low levels of investment and enormous — and rapidly increasing — capital flight. The current crisis will exacerbate the ongoing economic slowdown. Wealth creation — for investors and for millions of Russians — is permanently stunted. And there will not be any fundamental improvement in the perception of Russia for a long time.
