Global Economic News
Russian Stock Market in 'Free Fall'; Medvedev Calls for Liquidity Injections
Sept. 11 (EIRNS)The stock market collapse in Russia over the last days, brings to an the end the illusion that Russia would remain outside of the world banking crash, and unfortunately, President Dmitri Medvedev is merely calling for capital injections into the stock markets. The pricking of the oil and gas bubbles, as well as massive capital outflows following the Georgian crisis, has aggravated the liquidity crunch in the country. In that context, some of the Russian oligarchs were caught with their pants down in a scam, unable to pay their margin calls, having borrowed a lot of money to purchase high stakes in companies such as Gazprom and re-lent it for speculative operations, reports the Sept. 11 Financial Times.
On Sept. 9, the (dollar-dominated) Russian Trading Stock Exchange (RTS) dropped by 7.51%, falling another 4.36% on the following day. It is down 39% this year. More than $9.6 billion of the RTS index's market capitalization was wiped out Sept. 9, according to data from the RTS website. In Moscow, the ruble-denominated MICEX stock index also tumbled 9.08%. Oil and gas stocks, which dominate the RTS stock market, led the declines, with the RTS Oil & Gas index plunging 7.8%. Metals and mining shares also fell sharply.
According to the Financial Times, the Russian Central Bank injected $10 billion in one-day loans, and Itar Tass reported that Medvedev called on the Cabinet and the Central Bank to take all necessary steps to draw extra funds to the financial market and claimed the "current situation in the Russian financial market is a temporary phenomenon and the national stock market remains promising." He called for a strategy to develop the stock market as fast as possible. "It will help improve the quality of the national financial system," he said.