Economies, it turns out, are a lot like the millions of individuals they’re composed of. They have human qualities, cultural quirks, or at least we are tuned to think of them that way. Germany’s is orderly but inflexible, economists say nowadays, and is that any surprise? France’s is nicely managed yet particular and difficult. Britain’s is, well, increasingly American.

Russia’s, on the other hand, is tempestuous, unstable – prone to quixotic success and sudden disaster. Emotional, in other words, befitting the stereotype.

Through the 1990s, Western investors entered the Russian market, aiming to tame it by importing American or European business standards. Often, they found themselves drawn into its ways, tempted by promises of dazzling profits, tricked into cycles of excessive expectation and acute disappointment.

The market crash of 1998, triggered by a rouble devaluation and a partial default on Russian government bonds, scared crowds of investors away, many of them battered by the downturn.

Jürgen Kirsch was not one of them. The broker from Berlin- and London-based Griffin Capital Management won Finanzen magazine’s "Golden Bull" for fund manager of the year, in lieu of his Griffin East European Value Fund’s sterling performance in some of Europe’s least predictable markets.

The fund was bruised a bit in 1998, but it quickly recovered, consistently outperforming standard indices like the Nomura Eastern European Index from mid-1999 to the present.

While subject to the ups and downs of the market, Kirsch’s $45.2 million fund has ridden above the trend, for which he credits its managers’ "structured approach" and "detailed fundamental analysis".

Portly portfolio

Exposed mostly to Russia (64 percent), recent acquisitions have focused on oil stocks from Lukoil, Surgutneftegaz and Yukos, on the grounds that the have "lagged for some time and we felt that the correction in the oil price has been fully priced in," the fund reported on December 31.

Sberbank, the Russian state savings bank, has also caught Kirsch’s attention. He called its stock price "ridiculously low" and expects 100 percent growth in the next six to 12 months.

After Russia, the fund’s next focus is Poland (17 percent), especially the state telecom, followed by Hungary (10 percent), Czech Republic (9 percent), Slovenia (3 percent) and Estonia (2 percent).

Blowing bubbles?

The question for Kirsch’s admirers is whether he’s benefiting from just another bubble in a region that tends to burst?

Russia’s leading stock exchange, the Russian Trading System (RTS) has been climbing since November 1998, with few interruptions. Even the terrorist attacks against the United States last September registered as a mere blip. Is it’s progress as collapsible as it was in 1998?

It’s much less likely a bubble now than it was in 1998. Then, "irrationally exuberant" investors were piling into high-risk investments in Russia and Asia and got burned when the "Asian flu" proved contagious.

That crash, though, was a major market correction. Russia’s market, internally, is much less fragile than it once was, now that back wages are paid and local industrial production has begun to rise, albeit slowly, from the dormancy of the 1990s.