Investors everywhere want to get a return for taking risk and to be a part of economic growth. The very function of investment in capital markets is to provide funds so that companies and governments can grow, creating jobs and improving people's lives in the process. The needs in emerging markets create opportunities for investors, and that's exciting.
Russian market is not quite fully developed but is making efforts toward developing further. This country has some infrastructure, some stable government system, strong human capital and success with economic growth.
One of the simpliest definitions of whether a market is emerging is whether it appears in a financial index that tracks emerging markets, such as the MSCI Emerging Markets or the MSCI Frontiers Markets index.
Russia is truly emerging, because its economic growth is expanding beyond its borders. Russia produces enough goods that it exports to other countries, becoming an active participant in global trade. It has people who take the jobs that local companies are creating. And Russia is open to capital and investments from outside the country, whether by individuals, financial institutions, or multinational corporations.
There is one other catch: Russia as an emerging market has a stock market so that investors can buy and sell securities.
The Russian education system is excellent. In the Soviet era, the government pushed to train as many scientists and engineers as possible to gain an advantage over the United States, and the country still graduates world-class talent. In total, almost 43 percent of Russian adults are college graduates, one of the highest rates in the world. Russia also has one of the world's highest literacy rates, so even those who don't go to college can function in a modern economy. And almost 90 percent of high school students graduate. The depth of skills in Russia allow for extraordinary economic flexibility. The country has people who can do whatever work needs to be done.
Russia's extensive landmass is rich in natural resources. The country is one of the world's leading producers of oil and gas, and it produces iron ore, bauxite, and gold, too. Russia has ports to the northeast on the Baltic Sea, to the southeast on the Caspian Sea, and to the west along the Pacific Ocean. In between, Russia has rich agricultural soil and is a net exporter of grain and timber.
This nation has tremendous resources. It can sustain its own people, and it can provide food and materials to developed and developing nations worldwide. Russia has also been a special beneficiary of growth in India and China because those nations need Russia's resources.
After the 1998 default, the Russian economy was completely restructured. International investors were scared off, which in hindsight allowed the Russians to concentrate on making their own system stronger without regard for returns to other investors. Banks took a hard line on risk, and as a result, they made it through the 2008 global financial crisis with nary a problem.
And maybe as a legacy of the Cold War or the financial crisis, Russia doesn't have as much foreign investment as many other emerging markets. Instead, the country's impressive growth has been financed by a high savings rate and companies reinvesting their profits.