Russian stocks started the year very positively. The dollar-denominated indexes are among the best performing in the world, partly because of the strength of the ruble relative to the dollar since the start of the year and partly because Russia remains a high-beta theme within global markets. The other reason for the outperformance is that investors are becoming more comfortable with Russia's domestic story.

The macro backdrop remains very positive, with growth likely to be close to 4.0% and inflation around 5.0% in the current year. The Urals oil price also looks sustainable above $100/bbl, and that should lead to a near-balanced budget. Earnings growth outside of extractive industries is forecast at close to 20% for 2012 and 2103, and yet the market valuation is still running at an excessive 35% discount over EM peers.

Investors are also more encouraged by the government's response to the recent political protests and are becoming more hopeful that we are again at a significant turning point in the country's development. Added to that is the fact of WTO membership and some other concrete examples of reform progress in areas such as capital markets.

The bottom line is that, notwithstanding the Eurozone debt threat overhang, Russia's investment case has significantly improved since the start of the year. In the short term, the driver of all markets will be the outcome of the Greek debt talks. Beyond that, the drivers should shift much more domestically and positively. The net conclusion from The Russia Forum is that the positive momentum can be maintained in the longer term, provided the next government recognizes the opportunities and deals with the challenges that are already very visible.

The domestic theme sectors are best placed to deliver the strongest performance, partly because of the positive macro backdrop, and also because of the policy priorities from a much more demanding and engaged Duma. Real estate, consumer, pharmaceuticals, media, transport and banks offer the best potential returns for 2012. Utilities are also a strong investment theme, though it is likely to be much later in the year before the government looks at a return to the previous tariff growth plans. Still, valuations are now so low that investors are being paid to buy early and wait.

Chris Weafer is the Chief Strategist of Troika Dialogue