The Russian Stock Market, Speaking in Tongues
The image at left shows the performance of the dollar-denominated RTS stock exchange on Wednesday December 3, 2008.
Though the market lost only 13 points from the opening bell, this represented nearly 2.5% of the exchange’s total value, a stunning fact emphasized by the market being driven close to the critical 600 point psychological barrier, which it has already crashed through on a previous occasion. Gazprom and Sberbank, the two leading Russian companies, were down well beyond the market average, 4.8% and 3.8% respectively. The consumer and retail index was down even more, nearly 8%. The MICEX ruble-denominated index suffered a similar loss. On Tuesday, the losses were even more staggering, and the market was once again shut down to staunch the bloodletting, making about three dozen such occurences since the August crisis began.
It seems we now need a new vocabulary with which to discuss the Russian stock markets, which appear to be speaking in tongues. Saying that the market suffered “only” a 2.5% trading loss would not mean much in any other country, but in Russia these days such losses would be sufficient to run the market all the way into the ground. Now, the Russian market has a “good” day whenever a full trading session is executed without the market but summarily shut down in panic by regulators.
Meanwhile, the market would have fallen even further were it not for the relentless buying by the Kremlin itself to inflate the market’s value, just as the Kremlin is doing with the ruble. As the Kremlin slowly becomes the sole owner of shares, and the price of oil — the Kremlin’s only real asset — dips shockingly below $40/barrel, it really can no longer be said that a stock market exists in Putin’s Russia. In the same way, it can’t be said that elections exist, or high offices of government.
There is only Putin.