Russian Stock Market Conditions

Morris Segall     

The Russian stock market is down in dollar terms over 25% since our articles of August 6th, “International Economics” and August 11th, “The Dollar, Commodities and Geo-Politics”. It is down even more when valued in the rubles. Since the invasion of the Republic of Georgia, foreign capital has been fleeing the country and creating a financial crisis in the country.

Russian currency, capital markets and credit are in free fall as foreign investors abandon their investment in Russia due to its recent actions of “bullying” private sector companies, particularly foreign based investment. In addition, Russia’s invasion of Georgia has soured foreign investors on the tactics and foreign policy of the Putin government.

In the section on Russia in our Aug. 6th article we wrote about the negative foreign investment climate being created by the Russian government’s political actions and in our Aug. 11th article we wrote about the negative impact on Russian-American and Russian-European relations as a result of its invasion of Georgia. While the official government reactions to Russian militarism have been muted (in the case of the EU), the current financial crisis in Russia is definitely the reaction of world investors and creditors to what is now perceived as a high risk investment climate and one they do not wish to support.  Refer to the sections on Russia in our articles of Nov. 12, 2007 and Aug. 6, 2008 and our articles of Dec. 4, 2007 and Aug. 11, 2008.