Because of President Vladimir Putin's unfulfilled reform promises, many foreign investors are moving their investments from Russian focused funds to other countries. This would result in growing issues within the fledgeling capital markets of the European giant.

Nearly US$1.2 billion have been withdrawn from the Russian equity funds which is an estimated at 8% of Russian asset base. The main concerns were the economic slowdown of Russia, falling commodity prices and the lack of reforms progress to allow greater transparency in the business and investment environment.

Russian oil production is now near its Gulf Coast counterparts and well above its former Soviet levels. This would lead many to believe that petrodollars would push equity values. Unfortunately, the very nature of the abundancy has removed many incentives to undertake reformes in the business world in order to make foreign investors much more comfortable in Russia. 

In a recent speech before investors, President Putin reiterated his agenda of pushing forward with the sale of non-strategic state owned assets, fight graft and corruption, reduction of red tape and bureaucracy, improve property rights and cut back on reliance on energy exports as the main fuel for the Russian economy.