So much for emerging markets. See what happens when you try to be a bully and scare the rest of the world, Mr. KGB?
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 countrys 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 doesnt 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.
http://www.ft.com/cms/s/0/6ff9306c-83f1-11dd-bf00-000077b07658.html
