Russian President

Boris Yeltsin

resigned earlier today, accelerating the long-awaited end of the Yeltsin era and opening the door to a changing of the guard and increased stability three months earlier than expected. The Russian equity market shot up 16.8% on the news, although on just US$3.8 million in quiet holiday trading. Russian ADRs trading on the NYSE followed suit, with cellular provider

VimpelCom

(VIP)

moving up 8 3/8 to 42, oil giant

Tatneft

( TNT) rising 1 1/2 to 8 5/8, and long-distance carrier

Rostelecom

( ROS) increasing 4 9/16 to 16 5/16.

The timing of the announcement -- on the eve of the new millennium -- demonstrated again Yeltsin's flair for the unexpected and dramatic. More importantly, it significantly improved the already strong chances that Prime Minister -- and now acting president --

Vladimir Putin

will be elected president in late March. While uncertainty remained, the time when Russia hopefully will move a bit closer to normalcy -- with a leader who doesn't shuffle his cabinet every few months and doesn't topple over at official functions or slur his words -- is thankfully near.

Putin, named prime minister in August 1999, was at the time widely regarded as just another stopgap gray bureaucrat in the revolving door of Yeltsin's prime ministers. But the ongoing war in breakaway republic Chechnya -- ostensibly started by the

Kremlin

to root out the terrorists responsible for a string of apartment building bombings in Moscow in September -- pushed the popularity ratings of Putin through the stratosphere. Putin -- unlike his four prime ministerial predecessors in the year and a half before his appointment -- was also able to navigate the shoals of Yeltsin's impetuousness and intense power jealousy, garnering personal popularity without intimidating Yeltsin.

The Yeltsin camp, known as "the Family," may have engineered the resignation. Its goal: to improve its chances of, if not holding onto, power themselves -- at least passing it on to a man they hope they can trust. Yeltsin and his handlers may have reasoned that it would be easier for Putin to maintain his momentum until late March (under the Russian constitution, presidential elections must be held 90 days after the resignation of the president) than until July (when elections were scheduled to take place). Not surprisingly, just hours after being named acting president, Putin signed a decree offering a range of social and security guarantees to Yeltsin and his family.

With the next chapter in modern Russia in sight, perceptions of risk in Russia will continue to fall, as the chances that the Kremlin will engage in some extra-constitutional monkey business to hold onto power diminish. The Dec. 19

parliamentary elections were a first step toward reducing the uncertainty of Russia. By resigning, Yeltsin has moved forward the date at which Russian politics will become more predictable and more stable.

Of course, potential pitfalls remain. The war in Chechnya could suddenly go horribly wrong, throwing a dark shadow across Putin -- and thus opening up the race for president (and a brutal, destabilizing campaign). Regarding Putin, besides a determination to bomb Chechnya into oblivion, it's far from clear what he stands for.

Putin has made little indication about what he intends to do on the economic policy horizon, or what he will do to tackle the deep structural weaknesses that still cripple the Russian economy. Worse, Putin may be too beholden to Yeltsin and his handlers to bring about an end to the divide-and-steal method of governance that has characterized the past several years.

Kim Iskyan is an equity strategist at Moscow--based brokerage firm and investment bank Renaissance Capital. The firm's analysts rate the shares of VimpelCom a hold, and have done no recent underwriting for the company; Tatneft a speculative buy, no underwriting Rostelecom a hold, no underwriting. Iskyan began his career at the emerging markets trading desk of Oppenheimer & Co. At the time of publication, he held no positions in any of the companies mentioned in this column, though positions can change at any time. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

kiskyan@rencap.com