The Russian Stock Market in Horrifying Freefall
In Friday’s trading the Russian stock market’s RTS dollar-based index (charted at left) crashed through yet another critical psychological barrier. When trading was once again shut down at 1 pm Moscow time to halt the carnage, the RTS index was below 590, down over 7% on the day and less than one quarter of the value the index held in May of this year, down over 75% in just six months. When trading reopened an hour later, the index immediately plunged to a loss of over 13%, just under 550, and the market was shut down again, this time for the rest of the day and “until further notice.” Financials (down over 12%) and fuels (down nearly 14%) led the way into the abyss, and all this happened before the market could take cognizance of a big drop in the U.S. markets, which were down over 5% in early trading before climbing strongly at noon.
Gazprom and Sberbank were both down a jaw-dropping 22%. These are enterprises controlled lock, stock and barrel by the Russian government, and the government can do nothing to halt their slide, nor can it affect the plunge of the overall market even though it is frantically buying shares and squandering the national savings account to do so.Had the Kremlin not simply pulled the plug on the market at 1 pm, the market could well already have reached zero.There was a time, not long ago at all, when the Russophile madmen were talking about the Russian stock market and the Russian ruble the same way they used to talk about the military power of the USSR. And just as the USSR, despite all that blather, spontaneously collapsed and proved the utter folly of the propaganda, now the neo-Soviet economy has done exactly the same thing.
And as bad as things were on the RTS, they were even worse on the MICEX ruble-based index, where the lion’s share of the actual trading occurs.
As the price of crude oil plunged below $65 per barrel (remember, $70 was the critical level at which the Kremlin’s budgetary assumptions collapsed), the MICEX (which also halted trading around noon for an hour) was down a shocking 14% despite the Kremlin’s fevered buying of Russian shares to the tune of billions. The index was flirting with crashing through the stunning 500-point barrier! Markets in Britain, Germany and France were also down — but all of them held their losses under 10%. Once again, Putin’s Russia led the world in failure.
Will the people of Russia ever call their government to account for this failure? Will they even be allowed to know it is occurring by state-owned Russian TV? It can suprise nobody who reads this blog to see the neo-Soviet Kremlin behaving like what it is — an ignorant clan of KGB thugs totally incapable of managing a complex economic system with anything other than blunt trauma.
But that doesn’t make it any less horrifying.
Courtesy of the New York Times, a list of world stock market performance in October through midday in New York City on Friday (it shows the U.S. among the least affected of the world’s markets by the global crash this month, and Russia second from the worst in the world):
Iceland, down 83%
Russia, down 53%
Brazil, down 48%
Poland, down 46%
Mexico, down 44%
Canada. down 37%
India, down 36%
Germany, down 35%
Australia, down 34%
Britain, down 31%
France, down 31%
Italy, down 30%
U.S., down 26%
Finland, down 26%
Japan, down 23%
Israel, down 22%
China, down 21%
What do you have to say to that, Mr. Putin?