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The inauguration of President Medvedev provided a fitting backdrop for a strong rally in the Russian market as both major indices posted impressive gains for the day. With the seamless transition of power officially complete, the focus now turns to on how effectively the new President fulfills the high expectations of investors to follow through with the reform agenda begun under Vladimir Putin, the next Prime Minister. Once again, the energy sector lead the surge as crude prices moved past the $120 bbl level but blue chips, in general, all participated in the burst of optimism which was further assisted by positive US economic news. However, the prospects for a continuation of the rally dimmed overnight with a sharp decline in US markets due to the high fuel prices and indications that the SEC will impose more stringent capital and liquidity disclosure requirements for banks. While optimism in Russia abounds, the impact of developments in global markets continues to be the main impediment against a sustained breakout for Russian equities.
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