According to the World Bank, the post-crisis environment in Russia provided the necessary catalyst for reforms when it comes to the country’s structural constraints and weak domestic demand, writes Gleb Bryanski for Reuters. Without reforms, the World Bank believes Russia’s growth will remain sluggish. (Ways to play Russia’s recovery).

Russia’s Central Bank is expected to continue to cut interest rates to ease lending, but the cost of lending still remains high. The Russian Central Bank is trying to dampen the appreciation of the ruble and will soon have to choose “between maintaining a competitive exchange rate for tradable industries and avoiding inflationary pressures,” says the World Bank.

A return of capital inflows to Russia is expected by the first quarter of 2010 as oil prices increase and the global outlook improves. Russia’s inflation rate will range between 9% and 10% in 2010, but stimulus policies may raise it further in the second quarter. The unemployment rates may also rise based on seasonal factors. (Russia’s potential stumbling block).

Prime Minister Vladimir Putin stated said the government will continue to enact measures aimed at boosting domestic demand, strengthening the banking system and decreasing the budget deficit, as stated in BusinessWeek.

According to the Economic Development Ministry, Russia’s GDP is projected to contract 8.5% for 2009. The economy grew 0.6% in the third quarter, signaling an end to their recession.

For more information on Russia, visit our Russia category.

• Market Vectors Russia ETF (NYSEArca: RSX): up 137.2% year-to-date

• iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR): up 5% in the last month; Russia is 75%

• SPDR S&P Emerging Europe (NYSEArca: GUR): up 81% year-to-date ; Russia is 65%

• Dow Jones Emerging Markets Energy Titans (NYSE: EEO): up 16.8% in the last three months; Russia is 36.3%

Max Chen contributed to this article.

Emerging Global Shares has filed to launch a group of ETFs aimed squarely at the BRIC economies, according to Cinthia Murphy for Index Universe:

Emerging Global Shares INDXX India Infrastructure Index Fund

• Emerging Global Shares INDXX India Infrastructure Index Fund
• Emerging Global Shares INDXX China Infrastructure Index Fund
• Emerging Global Shares INDXX Brazil Infrastructure Index Fund
• Emerging Global Shares INDXX India Mid Cap Index Fund
• Emerging Global Shares INDXX China Mid Cap Index Fund
• Emerging Global Shares INDXX Brazil Mid Cap Index Fund
• Emerging Global Shares INDXX Growing Asia Large Cap Index Fund

Every single company within these funds will have no more than a 10% weighting. Net operating expenses are pegged at 0.85% for each fund. ALPS Advisors is the advisor for each fund, with Emerging Global Advisors LLC the subadvisor. (Read about the widening wealth shift between the United States and emerging markets).

Each fund will invest in securities, ADRs and GDRs of various companies to replicate their respective indexes. A fully replicating strategy will be used to assemble the funds, however, representative sampling may be used, if needed. (The ultimate guide to the BRIC ETFs). You can read the prospectus for the funds here.

The BRIC economies have been standouts this year as the world recovers from the global financial crisis, gaining about 110% since the market’s low. Russia has been one of the strongest, gaining 137% year-to-date. Brazil has gained 117%, China is up about 60% and India has added about 90%.

For more stories about BRIC ETFs, visit our BRIC category.

Van Eck

Van Eck now manages about $9.7 billion in assets. Their varied lineup includes about 20 funds that range from gambling companies to alternative energy to the Persian Gulf, reports Ian Salisbury for The Wall Street Journal.

Their strategy involves “nibbling at the edges”  which enables them to offer products that dabble in niche markets that generally aren’t available elsewhere. While both Van Eck and the fund industry giants with which it competes offer narrowly focused funds, the giants tend to offer slates of ETFs that, taken together, cover the entire market. (ETF portfolio basics).

Van Eck’s offerings don’t cover the spectrum, though. They have funds that cover steel, Russia and the gold mining industry, but you won’t find funds aimed at Japan or Western Europe. What most of their ETFs do have, as the company says, is some kind of relationship to “hard assets.” (The benefits of hard assets).

For more stories about ETFs, visit our ETF 101 category.

• Market Vectors Russia (NYSEArca: RSX): up 116.6% year-to-date

• Market Vectors Gold Miners (NYSEArca: GDX): up 36.3% year-to-date

• Market Vectors Agribusiness (NYSEArca: MOO): up 38.9% year-to-date

Holdings: EEG holds companies domiciled in emerging markets; some of the top companies in the fund include Russian natural gas company Gazprom, Brazilian energy company Petroleo Brasileiro, Latin American wireless provider America Movil and Bank of China.

Objective: EEG seeks to track the Dow Jones Emerging Markets Titans Composite Index, which is an index composed of a representative sample of 100 emerging market companies deemed by Dow Jones to be leaders in each of 10 sectors.

Things to Know

• Brazil is the top country, with 24.9% of the weighting. China has 24.3%, Russia has 13.4% and India has 13%. Other countries include Mexico, South Africa, Chile and Indonesia.
• Oil and gas is the top sector, weighted at 30.8%; financial is 22.1%; telecommunications is 11.6%; and basic materials is 9.3%.
• The expense ratio is 0.75%.
• EEG is a relative newcomer on the ETF scene – the fund launched on July 22.

The Latest News

• Emerging Global Advisors CEO Bob Holderith feels that interest in emerging markets should continue to expand. “It’s a 25-year growth story in its sixth year.” The positive growth outlook for emerging markets goes hand-in-hand with the changing demographic picture in these countries.
• Holderith notes that in most of these countries, there’s a huge young population, all looking for the “Western experience”: cell phones, iPods, dining out and more. (More on Emerging Global Advisors).
• Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy.
• Emerging markets already account for one-third of the global GDP and 10% of the world’s market capitalization.

Russia’s GDP is expected contract 7.5% this year, and the government is forecasting 2% growth in 2010 while many independent economists are estimating growth of as much as 5% next year, reports Jason Bush for Forbes. (Stumbling blocks for Russia’s growth).

Russia’s economy grew 0.6% in the third quarter from the previous three months, but GDP was 9.4% lower than last year’s levels, writes Nataliya Vasilyeva for BusinessWeek. The Economic Development Ministry stated that the improvements were attributed to less capital outflow and to companies replenishing stocks.

Manufacturing and agriculture have been the main industry drivers, with agricultural activity increasing by 10% and industrial production increasing by 5.1%. Retail sales diminished 9.9% on the year in September. (Four things going for Russia).

The downturn hit Russia hard for three primary  reasons, Bush at Forbes says. These are reasons to use caution when investing in Russia and to have an exit strategy in place. (How to follow trends).:

• One reason is oil prices – they plummeted, and Russia plummeted along with it. They recovered somewhat, and so did Russia.

• Another reason is their companies’ idiosyncrasies, which include holding copious stocks of inventory and engaging in cost-plus accounting, which means companies initially resist price cuts by reducing wages. These two reasons helped explain why Russia’s output plummeted early in the downturn. (Ways to play oil and Russia).

• Furthermore, Russia’s financial sector is still struggling and bad loans are expected to reach 20% by the end of the year.

For more information on Russia, visit our Russia category.

• Market Vectors Russia ETF (NYSEArca: RSX): up 119.9% year-to-date

• iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR): down 8.4% in the last week, recently launched; Russia is 75%

• SPDR S&P Emerging Europe (NYSEArca: GUR): up 68.5% year-to-date ; Russia is 65%

• Dow Jones Emerging Markets Energy Titans (NYSE: EEO): up 5.9% in the last three months; Russia is 36.3%

Max Chen contributed to this article.

Turkey. Turkey is rapidly developing and there’s no indication that the economy needs aid from the International Monetary Fund (IMF). Growth in the economy could likely accelerate in 2011 after a return to growth in 2010. Turkey’s market index has been driven up by the banking sector, which makes up around 40% of the market. Bank earnings have been bolstered by a series of rate cuts that have reduced interest on customers’ deposits as lending rates remain high. (Does Turkey need more support?)

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR): up 179% since low; up 101.6% year-to-date

Russia. Next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected. Economists believe Russia’s GDP growth may gain a foothold as soon as the fourth quarter because of fiscal stimulus. Additionally, the economy will pick up speed once oil prices increase and world economies recover. The Russian economy is dominated by resources and banking. (Russia’s potential stumbling blocks).

• Market Vectors Russia (NYSEArca: RSX): up 161% since low; up 139.5% year-to-date

Brazil. Brazil could sustain average annual economic growth of 5% over the next 10 years. Low inflation and sound fiscal policy have released a tide of investment in Brazil. For now, Brazil’s small-caps are benefiting from the carry trade. Companies are hiring workers to meet growing demand for manufactured goods and new homes. In 2010, Brazil’s economy is expected to grow 4.4%; this year, growth is expected to be around 0.12%. (Seven things to like about Brazil).

• iShares MSCI Brazil Index (NYSEArca: EWZ): up 125% since low; up 114% year-to-date

India. The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10, despite a potential decline in agricultural output. Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months. Factors such as capital flows, domestic demand, portfolio flows and a strong savings rate have India in a good position to continue moving forward. (Why India could strengthen).

• WisdomTree India Earnings (NYSEArca: EPI): up 138% since low; up 88.2% year-to-date

Indonesia. A young population and a falling birth rate equate to a surge in the ratio of working population to the number of dependents. Circumspect fiscal policy has left the government with enough cash for infrastructure and public services. Indonesia may enjoy a period of political stability and does not rely too heavily on exports. Declining interest rates have helped boost consumption, which is around 60% of GDP. (Five points in Indonesia’s favor).

• Market Vectors Indonesia ETF (NYSEArca: IDX): up 180% since the low; up 155.6% since Jan. 20 inception

Max Chen contributed to this article.

According to Gary Gordon for ETF Expert, there is a slight discernible difference between the five largest net exporters and net importers as shown in their respective ETF growths.

Net importers’ five-year total % change:

• Vanguard Total U.S. Market (NYSEArca: VTI): 12.8%
• iShares MSCI United Kingdom (NYSEArca: EWU): 10.7%
• iShares MSCI Spain (NYSEArca: EWP): 91.7%
• iShares MSCI France (NYSEArca: EWQ): 35.1%
• The India Fund (NYSE: IFN): 129.4%

Net exporters’ five-year total % change:

• iShares FTSE China 25 Index (NYSEArca: FXI): 173.9%
• iShares MSCI Germany (NYSEArca: EWG): 53.9%
• Central Europe/Russia Fund (NYSE: CEE): 91.3%
• iShares South Korea (NYSEArca: EWY): 90.5%
• iShares MSCI Netherlands (NYSEArca: EWN): 46.3%

The data shows that percentage gains are leaning toward exporters and developing countries, more export-dependent, are producing larger percentage returns.

Gordon makes the distinction that successful investing in seemingly export-type countries is more dependent on overall economic growth and less to do with the large “net exporter” moniker.

For more information on ETF trends, visit our trend following category. Read more of Gary Gordon’s ETF observations at ETF Expert.

Max Chen contributed to this article.

Growth prospects for the next year are looking ripe for Russia, but the country must overcome the rouble’s highs against the euro. Darya Korsunskaya and Yelena Fabrichnaya for Reuters report that the appreciation of the rouble does allow for lower inflation and more trust in the banking system, despite the dangerous levels. (How to play Russia and China’s gas deal).

On the plus side, next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected, according to the Finance Minister. Itar Tass forBusiness Standard reports that serious work is needed at the business and state level. Even if negative aspects of oil’s growth take over, Russia’s economy still stands in a good position, analysts note. (Four things going for Russia).

For more stories about Russia, visit our Russia category.

• Market Vectors Russia (NYSEArca: RSX): up 144.1% year-to-date

• CurrencyShares Russian Rouble (NYSEArca: XRU): up 6.2% year-to-date

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

The new iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR) has the following breakdown:

• Country weightings include: Russia 75%, Poland 13%, Czech Republic 6.4%, Hungary 6.1%.
• Sector allocation include: Energy 52%, Financials 16%, Materials 11%, Telecom 10%.

The fund’s largest allocations are in energy and Russia, with its two major holdings in Russia’s Gazprom, at 25%, and Lukoil, at 10%. Potential investors should be aware of higher risks, yet possible higher profits, involved with a fund that has a high percentage in any single company, writes Roger Nusbaum for TheStreet. The fund has an expense ratio of 0.72%. (More on Eastern Europe’s economy).

An alternative to iShares’s  new ETF is the SPDR S&P Emerging Europe (NYSEArca: GUR), which is currently up 88.4% year-to-date. GUR has an expense ratio of 0.59%.

• Country weightings include: Russia 65%, Turkey 14.8%, Poland 10.4%, Hungary 5.1%, Czech Republic 4.2%, U.S. 0.5%
• Sector allocation include: Energy 45.3%, Financials 22.9%, Materials 10.7%, Telecom Services 9.2%, Consumer Discretionary 3.4%, Industrials 3.0%, Utilities 2.7%, Health Care 1.2%, Consumer Staples 0.9%, Miscellaneous 0.4%, Info. Tech. 0.4%

New ETF provider Emerging Global Shares also has the Dow Jones Emerging Markets Energy Titans (NYSE: EEO):

• Country weightings include: Russia 36.3%, India 18.9%, China Offshore 16.3%, Brazil 9.5%, South Africa 6.8%, Thailand 4.2%, Chile 2.5%, Colombia 1.9%, Poland 1.6%, Hungary 0.9%.

Which ETF do you choose? It depends on the allocation you’re seeking and how much exposure to energy you’re seeking. GUR has a more even distribution among various sectors, but if you’d like a heavier weighting in energy, EEO and ESR may be worth some investigation, too. Be mindful, too, that some of these funds have heavy allocations to a single stock, which may increase volatility. (Four things going for Russia).

For more information on Eastern Europe, visit our Eastern Europe category.

Max Chen contributed to this article.

The deal calls for a supply of nearly 2.5 trillion cubic feet of gas per year via two potential routes originating from Siberia. The deal focuses on Central Asian countries and Russia as suppliers of natural gas, reports Edward Wong for The Wall Street Journal.

Gazprom, Russia’s state-run gas supplier and China National Petroleum Corp., China’s largest oil and gas supplier, have not yet worked out pricing details. (Read about the four things going for Russia).

A pipeline will run along the bottom of the Baltic Sea, driving a political wedge between Eastern and Western Europe. Central and Eastern European leaders fear the pipeline could usher in another round of domination by Russia through the use of gas, reports Andrew E. Kramer for The Wall Street Journal.

Russian gas has already been routed through Eastern Europe to Western Europe services. The new pipeline will give Russia a direct supply line to the west, enabling it to play “pipeline politics” with its eastern neighbors.

Read on for more stories about Russia, China or natural gas.

• Market Vectors Russia (NYSEArca: RSX): up 137.7% year-to-date; Gazprom 7.1%; RSX is also 43% energy

• iShares MSCI BRIC (NYSEArca: BKF): up 83.8%year-to-date; Gazprom is 4.1%

• First Trust ISE Revere Natural Gas (NYSEArca: FCG): up 52% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 63.2% year-to-date; China National Petroleum is 4.7%