Russian companies which listed in the first half of this year are bearing the brunt of equity instability but experts say the future looks positive.

Russian companies which went public earlier this year have been hit by the wave of instability which has affected equities markets worldwide.

However, experts predict a speedy recovery, driven by a strong economic environment.

Fallen angels – that's what investment bank Aton Capital calls the companies that have seriously underperformed in the market since their initial public offerings this year.

More than half of the 25 companies that have so far held initial or secondary public offerings are currently in the red.

Experts, though, put their underperformance into perspective.

“The first three months of the year the number of IPOs was nearly double that for all of 2006, and the number in 2006 was nearly double the number for 2005. So, it is just a crush of new issues on the market and there is only limited demand for these new issues,” said Eric DePoy, equity strategist of Alfa-Bank, Moscow.

But the degree of decline is not entirely justified, given that the greatest losers are also leaders in their respective industries.

The three worst performers include IT company Sitronics, down 56%, real estate firm AFI Development, down 34%, in the red and silver producer Polymetal, down 23%.

Another two hot IPOs, VTB Bank and independent oilfield services provider, Integra, are also down.

Despite the declines, market insiders are optimistic but say their forecast depends on the individual sector.

“If you look at those sorts of companies that have to raise and search for finance, if you look at real estate companies, they'll find it more difficult. If you look at the consumer and retail industries, they should do quite well because their existence in the market and their performance are functions of economic growth,” commented Tom Mundy, VP equity strategy, Renaissance Capital, Moscow

Post-IPO declines are not all that unusual analysts point out. More than half of the IPOs and SPOs last year were also in the red after the offerings. Nevertheless, many managed to recover and yield positive results within a year. So this year's fallen angels may be following suit, rising back to their all-time highs.