Participants in the fifth annual Russia Investment Forum were nearly unanimous in their optimism over the Russian equity market, saying last year's big decline was overdone.

Analysts and money managers at the Moscow forum, organized by Sachs Associates and Bloomberg, said they see the Russian market starting to take off in late 1999 and early 2000 with gains ranging from 30 percent to 200 percent.

Many said, however, that the sustainability of the gains would depend on more investor-friendly economic legislation, and an improved attitude on the part of government and corporations toward shareholder rights.

Participants cited new economic growth in Russia, prompted by the oil-price increase, as a key reason for optimism. Some said that when the wave of current bad news - reports of money laundering, political instability, war in Chechnya - passes, pent-up demand will help push the market higher.

One participant said he saw good signs right in the Slavjanskaya Hotel conference hall.

"When I see empty seats [here] - that's the most prominent bullish sign," Bill Browder, managing director of Hermitage Capital Management, told the forum. "My experience tells that when the conference auditorium is full, it's a 'sell' sign."

The conference hall was less than half-full. The majority of some 200 people attending represented several big Moscow-based brokers and a few money management companies with long-time Russian investments.

A couple of years ago, when the Russian market was roaring to an all-time high, full houses of more than 500 people generally showed up for the conference.

In voicing optimism, Browder had more than fund-manager's intuition and experience to support his view.

He emphasized that devaluation since August 1998 had led to strengthening of domestic industry, while higher oil prices brought a much better balance-of-payments and budget situation.

Other professionals agreed that positive developments in the Russian market were not fully reflected in equity prices, mostly because of the short-term political and infrastructure risks.

"The economic situation [in Russia] is far better than anybody could predict a year ago," said Jean-Paul Smith, Emerging Europe Equity strategist with Morgan Stanley. "We expect positive economic growth this year and the first half of the next year."

He noted that Russian market growth could also be fueled by a renewed interest in the bargains of the emerging markets over the overpriced U.S. market. He estimated that a 30 percent growth in the Russian Trading System (RTS) is possible for the first quarter of 2000.

Most of the speakers agreed on one thing - Russian stocks are very cheap at the moment.

"It is not a question of 'if' the money will come to Russia, but 'when,'" said Mark Cooke, chief investment officer of London-based Brunswick Capital Management. "It is cheap - people will come back."

Professionals said that risks such as political uncertainty and worries over Y2K problems should dissipate by mid-2000. To sustain growth, however, Russia would have to tackle the same problems it has been trying to solve for many years, such as corporate and government corruption and economic reform, participants said.

The view among investors is that the Bank of New York scandal and the parallel corruption scandals could be a positive thing for Russia in the long run. They have shown how damaging the issue of money-laundering is for Russia, Browder said.

"Many people knew about capital flight from Russia long ago - it is not big news now," one London-based analyst said. "Various experts for many years were openly speaking of $10 billion to $20 billion leaving Russia annually. And everybody who has ever done business in Russia knows corruption is the big problem."