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Russian stock market crashes, then closes...

 
Fantasia II
Koo Koo Ka Choo

User ID: 255967
United States
09/16/2008 02:31 PM

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Russian stock market crashes, then closes...
Russia halts trading after 17% drop
By Rachel Morarjee

Published: September 16 2008 15:07 | Last updated: September 16 2008 15:07

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

At 1700 local time, the rouble-denominated Micex index had fallen 17.5 per cent to 881.17 and the RTS index dropped 12 per cent to 1,131.120 as the falling oil price, margin calls on local investors and a broader sell-off in emerging markets stocks drove shares down.

“This is a good old-fashioned panic”, said Steven Dashevsky, head of research at Unicredit in Moscow. “It doesn’t feel like there is anyone domestically that can put the brakes on.”

Oil stocks tracked the price of Brent crude, used as a benchmark for Russian oil sales, as it sank below $90 a barrel. Gas giant Gazprom fell 8.3 per cent to Rbs98 and Lukoil dropped 12 per cent to Rbs1,355.51.

“The fundamental issue is oil. Russian oil companies are not producing more so their earnings are dependent on a rising oil price,” said Daniel Salter, analyst at ING. If the oil price falls, then earnings downgrades are in the pipeline for these stocks, he added.

State-backed bank VTB tumbled 33 per cent to Rbs0.03 and Volga Telecom sank 28 per cent to Rbs37.

Margin calls on local investors who have used stocks as collateral for loans continued to drive sales, as emerging market funds faced growing redemptions.
[link to www.ft.com]
George Orwell was right..Black is White, Up is Down, War is Peace...

"Never believe anything until it has been officially denied."

Yesterday is history.......Tomorrow a mystery.......Today is a gift......thats why we call it the Present!!!
Fantasia II (OP)
Koo Koo Ka Choo

User ID: 255967
United States
09/16/2008 02:33 PM

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Re: Russian stock market crashes, then closes...
World in meltdown. hiding
George Orwell was right..Black is White, Up is Down, War is Peace...

"Never believe anything until it has been officially denied."

Yesterday is history.......Tomorrow a mystery.......Today is a gift......thats why we call it the Present!!!
Fantasia II (OP)
Koo Koo Ka Choo

User ID: 255967
United States
09/16/2008 02:37 PM

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Re: Russian stock market crashes, then closes...
more....
MOSCOW -(Dow Jones)- Russian stocks suffered their worst day in 10 years Tuesday after fallout from Lehman Brothers' demise and concerns over banking sector liquidity prompted a fresh wave of brutal selling.

The benchmark dollar-denominated RTS index closed 11.5% lower at 1,131.12, while the more liquid, ruble-denominated MICEX shed 17.5% to 1,067.45. Amid the rout, both of Russia's major bourses suspended trading for an hour towards the close, the first time such a step has been taken since Russia's financial crash in 1998.

"The lower start triggered margin calls and forced sales by brokerages whose clients who couldn't deposit more funds as collateral," said Alfa Bank's chief strategist Ron Smith. "It's a self-reinforcing mechanism."

Russian stocks have endured a torrid summer as concern over political risk following Moscow's military campaign in Georgia heightened, prompting an exodus of jittery investors.

The RTS has now lost more than half of its value since peaking in mid-May and trades at levels last seen in December 2005.

Officials from President Dmitry Medvedev down have repeatedly sought to restore confidence in recent days, talking up the attractiveness of stocks and hinting that government money may be used to support prices.

The end of last week saw a mild recovery as those efforts seemed to be working, at least to a small extent. But the fallout from Lehman's bankruptcy, the sale of Merrill Lynch (MER) and new fears over the fate of insurer American International Group Inc. (AIG) have put nerves on edge once again.

The latest news from the U.S. wreaked havoc with Russian financial stocks. State-owned pair OAO Sberbank (SBER.RS) and OAO Bank VTB (VTBR.RS), the country's two biggest lenders, lost 15% and 29%.

Making an already-bad situation worse still, interbank ruble lending rates soared as confidence in the banking system ebbed, starving some banks of vital funds.

Selling pressure on the Russian currency forced the central bank to step in and buy more than $1 billion in rubles, dealers said, pulling yet more liquidity out of the system as demand for short-term repo operations surged.

"Big brokerages and banks are searching for money and applying much bigger haircuts to securities pledged as collateral," said Artem Moskovsky, a trader at UniCredit in Moscow. "Some have started closed off trading limits."

Trading floors Tuesday were rife with talk that a local brokerage was experiencing difficulties. The Vedomosti business daily had reported Thursday that KIT Finance stood to lose around $70 million after betting the wrong way in the RTS futures market.

"Hopefully the U.S. Fed or Treasury will stabilize international markets but the Russian government needs to do something about banking liquidity fast," said James Beadle at Pilgrim Asset Management in Moscow.

Russian officials, including Finance Minister Alexei Kudrin, Tuesday again pledged assistance. Prime Minister Vladimir Putin said monetary officials, policy makers and the country's largest banks would discuss joint efforts to alleviate the current problems.

But so far the mood remains tense, with the fear and uncertainty gripping most investors reflected in equity derivatives trades.

"The options market is arguably pricing in a disastrous scenario and a return to market conditions last seen at the start of the decade," investment bank Troika Dialog said in a note.

Web sites: www.rts.ru, www.micex.ru
George Orwell was right..Black is White, Up is Down, War is Peace...

"Never believe anything until it has been officially denied."

Yesterday is history.......Tomorrow a mystery.......Today is a gift......thats why we call it the Present!!!
Anonymous Coward
User ID: 55095789
Australia
03/03/2014 02:49 AM
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Re: Russian stock market crashes, then closes...
bump

Russian market will close within hours.

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