Trading in Russian Shares Halted

Discussion in 'Current Affairs, News and Analysis' started by wehappyfew, Sep 17, 2008.

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  1. Just saw this on the BBC website (I would have posted the link but not very IT savvy - perhaps someone else can?)
    It seems that the chickens may be coming home to roost after the Putin masterclass in statesmanship over the past few weeks. I recall (and I was one of them) many posters on ARRSE pointing out to the likes of Sergey, whitecity, domovoy etc that the Russian antics to remain in Georgia indefinitiely would not be the sharpest long term move. I am sure that there will be those who will blame this all on the dastardly US. However, when the Dow or the FTSE dropped by this kind of amount the West did not head to panic stations and close the index down. This probably shows that investing in Russia is still a risky (and sometimes profitable I suppose) business.
     
  2. Mr_Fingerz

    Mr_Fingerz LE Book Reviewer

  3. They have started trading again in commodities, futures and interest rates. The people you mentioned above (I was one of them but you missed me off the list) know that it wasn't a good long term move but argued that we virtually brought it on ourselves by attempting to apply double standards, ignoring Russia and playing bloody stupid games with Georgia.
     
  4. So is this good or bad news for us :? sorry dont know jack shit bout shares!
     
  5. in_the_cheapseats

    in_the_cheapseats LE Moderator

    I have a good polish friend of the investment banker type who has been working in and out of Russia for the last few years.

    Her line is that Russia doesn't need western money to operate. I think that today's events prove that she has been mistaken. Globalisation has reached Russia and the effect of its actions in Georgia, with BP + the credit crunch elsewhere has lead to today's events as investors lose patience and nerve to stay invested there.

    If I was Russian, I'd be pretty worried, simply because the upswing for Russia has been based on a v narrow front (energy) without much else to back it up. With money flowing out of the country at a rapid rate, I wonder how soon it will be before Russia realises it does need to play the global game properly for its own markets to survive.
     
  6. Big issue is the oil price. Russia is deep into early stages of Dutch disease - the economy is totally dependent on oil/gas revenue.

    Have you checked out how fast oil is heading south?
     
  7. in_the_cheapseats

    in_the_cheapseats LE Moderator

    Exactly my point. If they don't have that to hold things together, whilst it remains a great long term asset, they need something more.
     
  8. The other one to check out is Venezuela - due to Chavez pumping dry most of the cheap fields, while binning all work on making the more expensive fields productive, they will have serious problems. Between that and the cost of the not very clever social programs that he has put in, they need $100+ oil.
     
  9. Oil prices are on the level of the begining of this year. Previously they were lower and no matter were regarded as very high. From formal point of view the drop is 30-35% in dollars. but in Euro it is 15-20%. Taking into account that there was significant speculative component in oil prices we come to a conclusion that the prices merely returned to their normal level.

    As for Russian stock market 'crisis' then it has very weak connection to real economy. Likely Western gamblers lost their money. It is not a tragedy. State run corporations now are able to buy their shares back for very low prices and as I'm aware it is being done. Russian minister of finance today said (on TV) that the state directs $80 billions (mainly they are super profits from high oil prices) to state run corporationsand their structures. Unlike the situation in the USA no one Big Russian bank or big corporation are near bankrupcy.
     
  10. Sergey,
    Let's not pretend that there might not be a problem here. I can't believe that the credit crunch is delivering such good news as you suggest in terms of Russian economy. I mostly don't care whether the Russian economy goes up or down but Putin/Medvedev need to take responsibilitity if they want to be treated as a first world power. That involves making the economy being more attractive than purely dependent on high oil and gas prices. I am sure that you would criticise Saudi for its position but Putin is setting Russia up to be nothing more than a poor version of Saudi.
    whf
     
  11. It's already too late. Russia's workforce size is about to go through the floor as the poor birth rate of 1990-2005 comes home to roost in the number of 18y/o coming into the jobs market.

    Amatures talk logistics. Professionals talk demographics :D
     
  12. 'Buy back' of your own stock from investors means money more than likely leaves Russia, there is less money around to lend and that less capital directly and acutely effects economic growth. Nobel prizes have been given out on the study of this issue.

    Econ 101

    That's true to an extent. There no need for a gov't bailout in Russia because most of the largest corporations are subsidized by the government; ie they can run in the red or the black.

    The ultimate problem is that without oil and gas there are very few Russian big corporations or big bank resources.

    And that is a difference of seismic proportions.
     
  13. True. This is a difference of seismic proportions: while natural resources are at the base of Russian economy; at the base of US economy is tinkering with financial systems; and while Russia will still have its oil, gas, etc. to prop-up its economy in current crisis, US would have to hope that China, Russia and other countries whom America owes so much will come to the rescue.
     
  14. Where to start with this mess...where...
     
  15. I don't know.

    I just read few AMERICAN articles on "what is happening?", "why is it happening?", "where is it going to lead?, etc. and I got the impression that your view on the consequencies of this crisis for US and Europe is not typical.