LAST MONTH INVESTORS put aside fears that the Kremlin was on the verge of renationalizing Russia Inc and drove the RTS (Russian Trading System) index to a new high of 700. However, talk of bubbles, first heard in October, has reappeared.
Investors have been jittery over the past six months, in particular as a result of Mikhail Khodorkovsky being thrown in jail. The worries have been fed by president Vladimir Putin's landslide election victory, which has given him almost total control of the Russian state.
Local brokers are divided over what comes next. Some believe that Russia's strong growth means that the RTS is still a good punt; others say enthusiasm is become over-exuberant.
"We have marked everything down to at least hold, except Gazprom local shares and [pipeline monopoly] Transneft. The whole market is overvalued," says Oleg Maximov, an oil and gas analyst with Troika Dialog.
Most analysts agree that Russia's days of triple-digit gains are over. Many point to the flood of money pouring in on the back of $30-plus oil prices as being the main driving force on the market and warn that riding the wave of liquidity is a risky game.