The Russian economy has been growing solidly for the last eight years at an average rate of close to 7% per annum. Revenues from oil and gas exports have generated large current account and budget surpluses, approximately 10% and 7% respectively in 2006. The energy revenues have also helped Russia pay off its foreign debt ahead of schedule and build up the third largest foreign reserves in the world. What we have witnessed is one of the fastest and most comprehensive turnaround cases in modern history, and the macroeconomic situation in Russia today cannot even be compared to what is was in 1998 when Russia was on the verge of bankruptcy.

Although high world-market prices for oil and increasing prices for gas exports have been instrumental in this remarkable recovery, investment and consumer-driven demand are currently among the main growth catalysts. Fixed capital investment growth February 2007 y-o-y was over 20%, and retail turnover grew by almost 14%, driven by a 13.6% growth in disposable income and a 17.5% growth in real wages. With its abundance of natural resources and strong domestic consumer base, Russia is expected to become one of the world’s largest economies over the next decade. Fascinating, wouldn’t you agree? Worth a visit? We definitely think so.

It is our pleasure to invite you to the 3rd annual East Capital Summit - Russia, which will be held in Moscow 18-21 October. During the summit, we will discuss the recent economic development in the region, and also take a closer look at two business segments that we find particularly interesting: property development and banking. During recent years, the construction industry has experienced an unprecedented boom. Likewise, the banking and finance sector is showing significant upside where sector growth in, for instance, Russia and Kazakhstan averaged 40% and 74% respectively over the past three years. Increasingly sophisticated financial services and higher yield loans provide a positive outlook for key players in the region.

Together with East Capital Fund Managers – Peter Elam Håkansson and Aivaras Abromavicius – and other members of the East Capital investment team, we will meet and discuss with local Russian companies as well as regional players within banking and property development. We will visit Open Investments, one of the leading Russian real estate companies. In addition, we will listen to a number of Russian entrepreneurs representing the domestic growth sectors. During the seminars, local economic and financial experts will present their views on the current development and future outlook for the region. We will also have the opportunity to hear about East Capital’s product offering and approach to investing in Russia and the CIS.