16 September 2008

Emerging Markets, Russian Market, Crash and Burn

Russia’s stock market suffered its biggest one-day fall since the financial crisis of 1998, the South Korean won dropped by its most in a decade and the Ukrainian stock market fell 14 per cent.

Emerging market assets have been at the forefront of investor selling in the wake of the Lehman Brothers collapse because of fears over slowing world growth and increasing stresses in the global financial system.

Nick Chamie, head of emerging markets research at RBC Capital Markets, said: “Emerging markets are reeling from a significant rise in risk aversion. We have seen this trend pick up since the start of the week.” _FT
Russia's market had to close in the middle of trading due to the danger of even more massive sell-offs:
Russian shares suffered their steepest one-day fall in more than a decade on Tuesday, losing up to 20 per cent, as a sharp slide in oil prices and difficult money market conditions triggered a rush to sell ....Margin calls forced domestic traders to liquidate positions and brokers pulled credit lines. At least one Moscow bank failed to meet payments....Shares in Russia’s biggest state-controlled banks led the slide with Sberbank, the state-controlled savings bank, closing 21.72 per cent down and VTB losing 29.26 per cent. The bank was suffered on investor fears about its securities portfolio, which makes up about 10 per cent of its assets. _FT
The neo-imperialists who run Russia are stashing away Russia's wealth in their Swiss accounts as quickly as they can. The nice thing about being Tsar, according to Vlad, is that you cannot be held accountable by anyone at all.

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