Well, this is hardly news anymore, but Moscow's stock markets were closed again this morning. The news will obviously be in future when they are open. Russia's Micex Stock Exchange and RTS suspended trading this morning because their "technical indexes'' a measure of aggregate stock prices, fell more than 10 percent on opening.
Russian global depositary receipts plunged in London trading following the decision, led by steelmakers. The FTSE Russia IOB Index, a measure of Russian depositary receipts trading in London, sank 11 percent to 312.83 at 9:36 a.m. in London, the lowest in almost five years. OAO Severstal, Russia's biggest steelmaker, fell 23 percent to $2.50. Evraz Group SA, the second-largest steelmaker, dropped 15 percent to $10.60, or 92 percent below its May 16 high.
The Ruble Slides
The ruble fell to an 18-month low against the dollar this morning even while it strengthened for a second straight day versus an ever weaker euro.
The currency, which policy makers manage against a dollar- euro basket in an attempt to protect the competitiveness of exporters, fell as much as 0.6 percent to 27.3738 per dollar, the weakest since April 2006. It was at 27.3624 by 11:01 a.m. in Moscow, from 27.1991 late on Oct. 24. The ruble jumped 0.9 percent to 34.0292 per euro, the strongest in almost two years.
Bank Rossii, Russia's central bank, buys and sells foreign currency reserves to keep the ruble within a trading band against the basket. The basket rate is calculated by multiplying the ruble's rate to the dollar by 0.55, the euro rate by 0.45, then adding them together. Russia's currency was little changed at 30.3757 against the basket, from 30.4096 at the end of last week, when it strengthened just 0.1 percent. The 30.40 level is regarded by most analysts as the weakest end of the central bank's trading band. Bank Rossii sold almost $11 billion supporting the ruble against the basket last week, according to estimates by Moscow's MDM Bank.
Crude oil, Russia's biggest export earner, fell for a second day, extending its decline from a July 11 record of $142.27 to 57 percent. Urals crude, the nation's main export blend, slid 10 percent last week to $59.93, below the $70 average.
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8 comments:
The markets never opened on Monday. They announced on Friday that they wouldn't open up until the 28th (today).
"The markets never opened on Monday. They announced on Friday that they wouldn't open up until the 28th (today)."
That's strange, since that's not what they reported on Bloomberg, where I got the data. They were saying at the last point I read the updates on Friday that they were going to open on Monday, but that might have changed, since I am not on the spot, and obviously can't wander over to take a look and see what they are up to.
But isn't all this just part of the problem. Moscow effectively has a "part-time" bourse at the moment, and no one is ever sure what the opening hours actually are. I find this pretty revealing.
"That's strange, since that's not what they reported on Bloomberg, where I got the data."
The article which I believe you're referring to was written on the 24th, and updated on the following Monday, so you may have gotten the dates mixed up.
It's this one right? http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWwIx_M79yN4
Check other reports on Bloomberg, or the history part of the RTS website and you'll see that there was no activity Between Friday and Tuesday.
"But isn't all this just part of the problem. Moscow effectively has a "part-time" bourse at the moment, and no one is ever sure what the opening hours actually are. I find this pretty revealing."
Yes, the constant shutting down of the markets is certainly concerning, however I don't think letting them plummet 20-25-30% in a single day would be a good thing either. I don't think there are any simple solutions to this unfortunately, and I personally don't know enough about the stock market to know what would be the least damaging move to make at this point.
Though things have been looking better in the past few days, hopefully we've seen the bottom.
Interestingly, they view the current mess with a sort of shadenfreude as if it's a problem of the US and the West. In fact at the beginning of the crisis they even tried to celebrate the decline of the West and their own ascendancy. I think they got a bit more correct perspective recently, but it still does not sink in their minds that in this crisis they are part of the West. In fact, if i get it right they are more West than the West itself, their economy was one of the hardest hit by this crisis. Without their rainy funds and currency reserves, they would have been completely on the floor by now
Hi,
"The article which I believe you're referring to was written on the 24th, and updated on the following Monday, so you may have gotten the dates mixed up."
Yep, that was the one. My mistake. Trying to do too many things at one. Thanks for correcting me.
"Though things have been looking better in the past few days, hopefully we've seen the bottom."
On the equity markets maybe, but this moves over to the real economy now, via the credit crunch.
People need to look at what happened in the Baltics when the spiggots were tirned off - the canaries in the coalmine - or Spain, for that matter.
"Without their rainy funds and currency reserves, they would have been completely on the floor by now"
@ "nobody"
Absolutely, but 2009 is just going to be one hell of a year, and I have no idea when oil will be back over $100, so even $500 billion only goes so far. We watch and wait.
"I think they got a bit more correct perspective recently, but it still does not sink in their minds that in this crisis they are part of the West."
Couldn't agree more. I guess that little tank ride through the Roki tunnel will go down as one of the most ludicrous pieces of folly in modern history. As you suggest, in an age of such extended globalisation there isn't "them" and "us" anymore, just "us" and "us", and that guy you see in the mirror, and take a shot at, turns out, like something from Tarkovsky movie, to actually be you.
"I guess that little tank ride through the Roki tunnel will go down as one of the most ludicrous pieces of folly in modern history."
I'd hardly go that far. Russian stocks were already in a deep slump that started in June or July. At most the war just accelerated what was already going to happen, and at this point I doubt anyone is even thinking about it anymore.
They did the right thing though, a few hundred deaths could have turned into something much worse had they not intervened. It could have been the Balkan wars all over again.
Hi again,
"I'd hardly go that far. Russian stocks were already in a deep slump that started in June or July."
Oh yes, definitely, I agree.
"At most the war just accelerated what was already going to happen"
Again, I agree. But you need to light the match to set off the tinder box. I think this was the straw that broke the camels back.
"at this point I doubt anyone is even thinking about it anymore."
Well I am. It's funny how are historical memory is changing these days, and things move into the past so quickly. But then, even I haven't got the time to go into any of this right now. What I would say is that it wasn't sending the tanks through that really started the sell-off (I mean stocks were down before mid August, but reserves weren't streaming out), but the unilateral decision to recognise South Ossetia. That really brought the house down.
And you need to bear in mind that this trigger set things off all over the CEE and the CIS, just look at Ukraine and Hungary, and most of the rest of them are about to follow. This is epochal stuff, in my opinion. None of this will ever be the same again, becuase now we get into the serious demographic side of all this.
So, agreed, it would have happened anyway, but I think 7 August 2008 will go into the history books (assuming there still are justory books) as the day one epoch ended and anotherv started, just like 9 August 2007 (the day PNB Paribas found they were $2 billion dollars short to close their books on the day) will go do in another way as a historical before-and-after watershed.
Couldn't agree more. I guess that little tank ride through the Roki tunnel will go down as one of the most ludicrous pieces of folly in modern history
I am not sure if it's over - the French foreign minister said that Russians are now busy granting their citizenship to ethnic Russians in the Crimean peninsula. In the Russian "near abroad" this is an ominous sign. They also seem to have completely messed yet another one of their Caucasian republics - there are almost daily reports of attacks on convoys and checkpoints in Ingushetia.
Regarding their economy, I was actually born and grew up in Russia. My family is there and some of the people I know traveled to and lived in Moscow/St. Petersburg to do business. Everybody is complaining about corruption that's starting reaching incredible proportions, inflation and small businesses being suffocated and pushed out by large networks.
And when it comes to bubbles, I believe they have inflated huge bubbles in both cities largely because they have a weirdly structured taxation system. All these mineral extracting behemoths that are pumping oil in Siberia and elsewhere pay taxes in Moscow because this is where their headquarters are located. Many provincial areas looks as if Perestroika never happened, while there is just too much money in Moscow and St. Petersburg. Apparently they were starving of funds the periphery while inflating bubbles in big cities. It was a wise decision on their part to divert much of their petrodollars into rainy day funds, because this money would have only encouraged more corruption and inflated their bubbles even more. They created a system that's capable of neither putting these petrodollars to good use in the big cities, nor to deliver them properly to their periphery.
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