Once again on Monday, at 5 pm Moscow time, the dollar-denominated RTS stock exhchage was shut down to staunch frenzied, panicked selling.
When the Kremlin threw in the towel, the market was down 6% and flirting with crashing through the 600 point barrier, into truly shocking 500-point valuation — close to 80% less value than it had six months ago! The RTS market “closed” at 605, and the MICEX ruble-denominated market was shut down as well, having shed over 5% of its value and actually crashed through the 600-point psychological barrier to close at 560.
The oil & gas index led the way down as oil prices continued their precipitous slide and the value of Russian crude oil slipped well below $50/barrel. LUKOIL was down nearly 12% and so was the once-mighty Norilsk Nickle minerals concern. Sberbank was down nearly 10%. “Oil falling below $50 is a very worrying sign for the Russian budget,” admitted Alexander Zakharov, co-head of equities at Moscow-based Metropol.
Amazingly, the Russian ruble was stable, indicating that the Kremlin was spending its reserves at truly furious rate to keep it that way and giving Russia a fully-fledged Potemkin currency. What happens when the reserves run out, as they will do in less than a year at this rate of spending? Only the Devil knows for sure.