Stock indices started moving up in the majority of foreign markets, but the Russian market is taking one plunge after another. This is logical, as the temperature on the Russian stock market directly depends on oil prices, which have been sliding since the July jump.
U.S. Treasury Secretary Henry Paulson said on Monday that the government had taken control of the troubled mortgage giants. "Government conservatorship" of the two companies, which together control approximately 50% of the $6 trillion mortgage market in the U.S., should help the administration overcome the consequences of the financial crisis and stabilize the national economy.
The global economy sighed with relief at the decision, and combined stock indices in Asia, Europe and the United States renewed their daily records. Some financial companies soared by 10% and more.
Analysts in Russia hoped this would end the black period in the Russian stock market, where indices lost approximately 10% last week. Their hope had a solid reason behind it, as the Russian market gained as much as 30% after the U.S. administration saved the Bear Stearns mortgage bank in spring 2008.
The Russian stock indices grew to 3.28% on September 9 and the ruble gained 19 kopecks, to 25.26 rubles per $1, and 12 kopecks, to 36.26 rubles per one euro. But the trend reversed the next day, when the RTS and the MICEX exchanges plunged by 7.51% and 9.08% respectively. Energy giant Gazprom fell by 7.8%, the country's largest private oil company LUKoil by 9.1%, and Rosneft, the biggest state-owned crude producer, by 10.2%.
This was to be expected. Russian officials used to boast about the Russian market's stability in conditions of the global financial market, but independent economists pointed out that its stability rested fully on the Russian economy's dependence on commodities.
While prices of hydrocarbons were growing, the Russian economy remained immune to the U.S. mortgage meltdown and the subsequent global financial crisis.
But the idyll could last only until the global economic slowdown affected energy prices. When crude prices fell to the early 2008 level after the July records, investors started withdrawing money from commodities assets.
The negative effect was compounded by the appreciation of the dollar against the ruble. Investors are now booking their profits by withdrawing from ruble denominated securities.
Other reasons for Russia's current financial trouble are the conflict with Georgia and deterioration of Russia's relations with the West, which have made Russian securities less attractive to foreign investors.
Nobody knows how to stop this. Even a proposed tax cut for oil companies has not stopped the capital flight.
The Energy Ministry has proposed increasing the minimum price for severance tax to $27 from $25 per barrel.
Neither has the situation improved after Deputy Finance Minister Dmitry Pankin said on September 9 that next year 80% of the national welfare fund would be invested in securities, including Russian papers.
Analysts say the Russian government has no instruments to quickly improve the situation. However, according to long-term forecasts energy prices will eventually resume their growth, and stock market speculators will again become interested in cheap Russian assets.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
