Equities in emerging Europe registered losses during August and underperformed versus developed markets. A decline in oil prices along with a rise in the required risk premium due to increased geopolitical concerns regarding the Georgian situation ensured that Russian stocks were the weakest performers in the region.Russia's RTS (US$) index dropped to its lowest level since 2006 after the Russian government's decision to recognise Georgia's breakaway regions threatened to deepen a rift with the West. Investor confidence in the region was also unnerved by concerns that Western Europe was heading into recession. However, economic data in the emerging Europe region continued to remain positive.For example, retail sales in Poland rose by an annualised rate of 14.3% in July, underpinned by record-low unemployment levels.