Russia halts trading after 17% share price fall

#1

OrangeEmpire

The White Debonair
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#1
FT.com / In depth - Russia halts trading after 17% share price fall

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.
The heads of the Russian central bank, the finance ministry and the financial market regulator met on Tuesday night for an emergency discussion on ways to halt the crisis.
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Earlier, trading had been suspended on both the Micex and RTS stock exchanges as investors ignored assurances by Russian officials and a cycle of distrust set in amid liquidity fears.
Margin calls forced domestic traders to liquidate positions and brokers pulled credit lines. At least one Moscow bank failed to meet payments.
The rouble-denominated Micex Index closed 17.75 per cent down, the sharpest one-day drop since the August 1998 financial crisis, while the dollar-denominated RTS index closed down 11.47 per cent, its lowest lvel since January 2006.
Interbank money market rates climbed to 11 per cent, their highest since a mini-banking crisis in summer 2004.
Chris Weafer, chief strategist at Uralsib investment bank: “We’re in completely uncharted territory where the prevailing emotion is of fear and numbnes. No one knows where this could stop”.
Alexei Kudrin, finance minister, insisted that the financial system was not in a systemic crisis but the central bank injected a record $14.16bn in one-day funds into the money market.
The finance ministry also placed an additional R150bn ($5.8bn) in one-month deposits into the banking system. Konstantin Korishchenko, central bank deputy, told Russian news agencies that the bank and the finance ministry could provide a total of $117.6bn in liquidity to the banking sector.
But market players said banks were ceasing to lend to second and third-tier companies and brokers were pulling credit lines. KIT Finance, big Moscow investment house confirmed rumours that it had been unable to make payment on a series of short-term loans.
It said: “In connection with the fact that a series of our clients did not meet their obligations to our bank, we have not met our obligations to our counterparties.
“We recognise our responsibility to our counter-parties and to the market and we are working intensively to resolve the situation.”
Andrei Sharonov, managing director of Troika Dialog, a Moscow investment bank, and a former deputy economic minister, said: “This is a vicious circle,” said , .
“It is a situation of total mistrust. The liquidity crisis is being caused by a crisis of confidence in which people are frightened to borrow and frightened to lend.”
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.

Thoughts?
 
#2
#2
I'm thinking that their entire exchange is heavily dominated by the oil industry.

The falling price of oil is going to be murder for their economy, which I find to be very interesting, given their new penchant for their old ways.
 
#3
#3
I'm thinking that their entire exchange is heavily dominated by the oil industry.

The falling price of oil is going to be murder for their economy, which I find to be very interesting, given their new penchant for their old ways.

It does make you wonder.............
 
#4
#4
opec may use this to further validate their reduction in oil output...not that they really care what anyone thinks.....
 
#5
#5
Iraq will want some of that $100 billion in New York banks to weather the effects on the dropping price of oil on their new fledgling economy.
 
#8
#8
Nope. Only point was that there goes some of that dough we were at various points told the USA might get to help offset the cost of some of the misadventure over there.
which misadventure? you mean the one the press no longer likes to cover?
 
#9
#9
The Russina markets shot up about as fast and much as the oil market, so this didn't surprise me.
 

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