Remember, remember, the 5th of November, gunpowder, treason and plot.

Well, we saw the treason and plot last week, with the ousting of Iain Duncan-Smith and the very swift upgrade to Michael Howard's position in the Shadow Cabinet. This week is the turn of the gunpowder. The Bank of England's Monetary Policy Committee meets on Guy Fawke's Night to deliberate whether or not interest rates should be raised. The decision will be announced at high noon the next day. The City is expecting the Bank of England to light the touch paper of a quarter point interest in rates, setting the fireworks for home owners.

The market is already factoring in a quarter point rise to 3.75 per cent. Last month's vote showed a five to four majority for holding rates as they are, but growing concerns over mortgage lending may tilt the vote in favour of the hawks arguing for higher interest rates. It is difficult to assess, as yet, whether any increase will be merely a warning shot across the bows or the first in a series of increases. This all hinges on economic growth figures and the direction of inflation going into 2004.

The phrase "the Russians are coming" used to spark fear in this country in the days of the Cold War, on the sight of anybody wearing a fur hat. The new capitalist economy in Russia, until very recently, however, has been a goldmine for speculative investors. The enriched few have not been the only beneficiaries of new-found wealth in the area.

Investments by the huge UK oil companies, BP and Shell, will eventually see wealth repatriated to the UK. In contrast to the UK economy, substantial Russian Government surpluses now exist on both the budget and current account level, and reserves are large enough to sustain the economy, even in the case of a significant reduction in the price of oil, and economic growth remains exceptionally high.

Politics, as ever, remains a significant factor. The arrest of Mikhail Khodorkovsky, the chief executive officer of Russia's largest oil company, Yukos, on charges of tax evasion and embezzlement, scared the market and caused a swift 15 per cent fall last week. The fact that Khodorkovsky has been funding several opposition parties and expressing an interest in selected office, has not helped him. Yukos-Sibneft, the merged company, where Chelsea owner Roman Abramovich has a significant stake is, however, run by a board of well known, internationally respected individuals. The sharp setback in the Russian market now offers an investment opportunity through respected European emerging market funds.

The risks of investing in this area remain high, and we would expect to see continued market volatility ahead of elections on December 7.

I am often asked what is the minimum amount for a stockbroker to invest in the stock market. The simple answer is that there is no minimum, but the sum involved often dictates the particular investment products suitable. The question of tolerance of risk, ranging from investing in UK Government stock to Russian equities, determines in which areas of the market the sum can be invested.

- For investment advice contact Anthony Platts on 01642 608855.

Published: 04/11/2003