Russia halts trading after 17% drop

Russia halts trading after 17% drop

www.ft.com

Russia authorities halted trading on the country’s stock exchange on Tuesday after it plunged 17 per cent in a broad-based sell-off.

"The fundamental issue is oil. Russian oil companies are not producing more so their earnings are dependent on a rising oil price,”

(visit the link for the full news article)

Are we seeing another battle in an extended, delayed cold war? Today, the Fed kept the U.S. interest rate the same and refused to bail out the Lehman bank. While at first glance this is just the U.S. government being stubborn, but perhaps this was a calculated move. The Fed had to know that keeping the rate fixed would make oil slide even more. The result is that Russia lost a foothold it had in it's struggle to become a superpower again.

Calculated, cunning, or just coincidence?

www.ft.com
(visit the link for the full news article)

17% is a huge drop. The 500-point slide on the Dow Jones yesterday was only about a 4.5% loss.

Time is slipping....

Originally posted by bsbray11
17% is a huge drop.

I would disagree, seeing that the price of oil has recently fluctuated by more than that, and there's gotta be a correlation between oil and the Russian stock market. If anything, it's damped.

The global economy is beginning to buckle. Get ready, here it comes folks. 17%

Originally posted by buddhasystem
I would disagree, seeing that the price of oil has recently fluctuated by more than that

It was the steepest drop in their market in over a decade, according to that article.

You're just so used to oil prices fluctuating because you're used to be screwed with by the oil companies for the last 8 years.

wow 17% and we are crying about 4%. The fact is Russia's economy is reliant on expensive oil and right now oil is plunging. My fear is they will want to go to war to get more oil supplies. Guess which country will step in if that happens because we all know the US needs to be the worlds police (BTW Im being Sarcastic) I think we will go into a small economic war to show Russia who is still in charge but hmmm.

This is just another example of how tightly all nations are tied to the global economy. Take a look at this comment in the OP's link:

Alexei Kudrin, finance minister, insisted that the financial system was not in a systemic crisis but the central bank injected a record $14.16bn in one-day funds into the money market.

Sound familiar?:

U.S. President George Bush says he is confident the American economy is "flexible and resilient" enough to survive the recent turmoil in financial markets.

source:story.japanherald.com...

This news from Russia coincides almost exactly with the timeframe today in which our market started shooting up (at least the time stamp on the original ft article.) I'm not entirely sure if that can be correlated into whatever hurst Russia's stock market apparently is a boom to our own, or if it is purely a coincidence. Either way, I keep hearing "Today's the day" jargon and rhetoric pertaining to our market imploding and the truth of the matter is we just saw a single day 500+ point drop followed by a decision not to lower interest rates from the fed which, afterward, the "experts" said it was a bad move and the market would begin to rapidly decline for the rest of the day... and the market is up 100 points as I type this.

This further strengthens my belief that economics, particularly the stock market, is one of those issues alongside religion & politics, that everyone believes they have all the answers to when, in reality, they still don't even know what the damn questions are, let alone the answers.

Originally posted by ProfEmeritus
This is just another example of how tightly all nations are tied to the global economy. Take a look at this comment in the OP's link:

Alexei Kudrin, finance minister, insisted that the financial system was not in a systemic crisis but the central bank injected a record $14.16bn in one-day funds into the money market.

Sound familiar?:

U.S. President George Bush says he is confident the American economy is "flexible and resilient" enough to survive the recent turmoil in financial markets.

source:story.japanherald.com...

No it doesn't.

Russia has €500b in reserves and the country is debt free. Furthermore market manipulation is far more difficult in Russia and the EU than in the USA and Britain which are living a kind of ostrich-like, make-believe existance at the moment.

I'm starting to think there's something more going on here that we're not privy to...

What do you guys think?

Cold war style attack on the financial sectors of both sides? Russia hits the west, we hit back? I'm not a financial expert by any means so I don't know what this would look like or how it would be done, I'm only observing the results with an open mind.

It just seems like it's all happening so fast.

- America starts hurting financially.
- Conflict by proxy breaks out in Georgia.
- US/Russia relations take a further dive.
- Russia starts playing proxy games with Venezuela and Cuba.
- Russia hit financially, hard.

[edit on 17-9-2008 by ANoNyMiKE]

Everyone owning Russian stock in July has had the last 3 (seriously bad months) to get out. It's reached a panic situation because of that fact. There are no bargains if you can buy the same bargain cheaper tomorrow!!
The Russian stock market was dependant on oil and minerals. The prices of these were made high firstly by a narrow match between supply and demand, secondly by speculators cash. Slower economic growth has taken care of the supply and demand issue, prompting speculators to look to the credit crisis to provide new opportunities for their cash loans, stock ect.

On A Brighter Note...
However the prices of commodities remains about the same as last year (considered very high compared with the year before) and because it takes time for wealth to trickle down the Russian consumer hasn’t suffered a fall in wealth like their markets. The Russian consumer has also been protected by the fact that many Russians do not invest a great deal of their wealth in their own markets.

Therefore there is much money to be had in the Russian stock market. The question is… How much more will commodity prices fall? My guess looking at the wider world economy and today’s still high prices is lots. The second question is the first: when can I not buy today’s stock cheaper tomorrow?

So the Russian market is a place to seriously watch for a turn around, but a turn around would not be backed by fundamentals until commodity prices settle, and this won’t happen until the world economy has also settled.

In the worse case scenario: Should the American economy collapse, commodity prices return to the 90’s, and then after all the pain, the world finally puts itself on a position to recovery, then and only then will the Russian commodity market be the worlds safest place to make big money fast!!

My guess here is that due to the ever increasing tensions between Russia and the US; foreign investors mainly from the US are probably being advised by our government to pull out.

Originally posted by CaptGizmo
My guess here is that due to the ever increasing tensions between Russia and the US; foreign investors mainly from the US are probably being advised by our government to pull out.

I would assume the russians think it is deliberate. SO thats why trading stopped. The people in the west have alot of money and would not mind, something happening in russian markets, this is why russia needs to do this, and continue it.

This is NOT a US versus Russia economic phenomenon. Just go read the news...the markets around the whole world are falling!!

They are all in on this. When the world market crashes they can usher in the new one world currency.

The real question here is whether trading was halted due to a "limit lock," or whether the Russian govt just stepped in (and thus overstepped the rules) and unilaterally shut down trading.

Compare it with the NYSE. If the market moves a certain percentage IN EITHER DIRECTION, trade is halted for an hour, or until there is a trade in the opposite direction, then the market is allowed to resume. These locks are SUPPOSED to go in both directions, but even NYSE tries not to enforce them on the upside (which would limit stakeholder profits) but keep them on the downside (protecting vs losses).

The think you simply must have to attract foreign investment is transparency. Everyone must know in advance what the limits of losses can be. Basically, you now know that you might not be allowed to short the russian exchange. And if you cannot short it profitably, there will be fewer middlemen, and thus fewer trades.

You basically have to have a FREE auction, one with downside possibilities, if you want a free market. Russia makes a bad choice when they do things like this.

They are basically scaring off speculators, but also scaring off the market liquidity that we provide.

.

reply to post by dbates




today, Wed. 17 Sept, the Russia - MICEX -
the stock exchange actually closed down again,
that's after Tuesdays closure due to the banks reserve requirements....


i think the acronym MICEX is a dandy!

It's the national equivalent of "banker's hours". The general theory is that if you close your doors people can't come take money out. Not really a capitalist thing to do but then no one ever accused Russia of being a capitalist society.

Oil is one thing. Imagine what kind of crazyness would happen if we found a really really good battery/energy combination that did not require oil? Like a 50x better solar cell or a super-battery. If we closed the oil markets, there would be millions of people with no way to make income - everywhere from Russia to the Middle East. Sheesh - talk about a dangerous situation. What may keep the economy and humanity going is the ongoing growth of the oil / energy industry.

www.rts.ru...

Russia oil/gas index down 4% today but other sectors even more.

RTSI down 35% in the last month. We're nowhere near that.

Wow - graphs look nasty when looked at for 3-mo period.

www.rts.ru...

[edit on 17-9-2008 by bonaire]