
The Russian stock market tracks the Georgia crisis
EDITORIAL
Putin, Enemy of Markets
The Moscow Times reported on Wednesday: “Russia stocks slumped badly Tuesday as concerns over the continuing Georgia crisis fueled investor pessimism . . . . The dollar-dominated RTS index sank 5.2 percent to 1,685.6 points, its lowest since November 2006, while the ruble-denominated MICEX Index dropped 6 percent to 1,361.54 points, its steepest fall in almost seven months.”
As the chart above clearly shows, between August 6th, when Russia invaded Georgia, and August 10th, when it agreed to a ceasefire at the urging of French President Nicholas Sarkozy, the market lost over 10% of its value. It then recovered on news that the country would stop fighting, only to plunge again when it became clear that Russia had no intention of keeping its promise to Sarkozy, as world condemnation escalated. Informed investors understand the basic reality: The Russian market is a hollow fraud, utterly dependent upon the fluctuating market for crude oil, with no normal foundation based on diversity and consumer production. On top of that, Russia is governed by a rogue regime capable of seizing assets and starting unwinnable wars at the drop of a hat, isolating Russia from world markets and terrorizing businessmen of all stripes.
The Motley Fool gets it: “With all that’s occurring in Russia these days, I’m wondering how long it’ll be before Western investment in that nation grinds to a halt.” They say Russia is now an “investment gulag.”
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