Russia 01 (May 08 - Jul 10)

[kennynah]

everything moves in a cycle...there's a time to till the land, sow the seeds, a time to cultivate the crops and eventually harvest the rewards. the sun goes around the earth, and the earth around the moon. a time we take feeder services and go around the estate, a time for birth and a time for death. a time to sleep and a time to awake...etc

and so, similarly for investments, everything rotates....this is nature...some economic boom cycles have longer time spans and some have shallower troughs....

[winston]

Not vested.... luckily ( whew ! )...

The Lyxor ETF Russia 2831 listed in HK is down 12% today !

Still watching this falling knife drop..

Just when you thought that it has touched the floor, it went thru the cement and is onto the next floor

The high is 54.45. It is now 27.75, down 49%.

In comparison, SH has dropped 60% already.

During the Asian Financial Crisis, a lot of stocks were down 80%., so this one may have some more to go ...

[LenaHuat]

Reuters has a Russia Investment Summit between 8-9 Sep 2008.
U can get the contents here :

http://www.reuters.com/summit/RussiaInvestment08

[LenaHuat]

The Russian Ex is closed for a 2nd day.

[millionairemind]

Alot of emerging markets are being sold down excessively, funds leaving in droves. be careful!

Russian Emergency Funding Fails to Halt Stock Rout (Update1)

By Alex Nicholson and William Mauldin

Sept. 17 (Bloomberg) -- Russia poured $44 billion into its three biggest banks and halted stock trading for a second day in a bid to halt the biggest financial crisis since its devaluation and debt default a decade ago.

The Finance Ministry extended the repayment period for OAO Sberbank, VTB Group and OAO Gazprombank to three months from one week. The benchmark Micex stock index plunged as much as 10 percent, taking its three-day decline to 25 percent.

Russia's financial markets are facing the biggest test since the 1998 crisis that pushed the government to default on $40 billion of debt and devalue the ruble. Global turmoil sparked by the collapse of the U.S. subprime mortgage market has led to a drying up of lending between banks and this week forced Lehman Brothers Holdings Inc. into bankruptcy.

``I will tell my clients today to continue to abstain from buying Russian assets'' until economic problems are solved, said Zina Psiola, who manages a $1 billion Russian equities fund at Clariden Leu AG in Zurich.

The cost of lending has soared to a record, with the MosPrime overnight rate reaching 11.1 percent today, deterring speculative bets in equities. Russian stocks have lost more than $425 billion in value since reaching an all-time high May 17.

`Effectively Closed'

``The bond market remains effectively closed and banks are reluctant to lend to one another,'' said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London.

The ruble has lost 4.8 percent against the dollar since Aug. 8, went Russia sent troops and warplanes into Georgia for a five- day military campaign that led to the worst relations with NATO since the Cold War. Investors have pulled at least $35 billion out of the country in the month since the war, according to BNP Paribas SA estimates.

Oil production, the government's biggest source of revenue, and accelerating inflation are adding to concerns for investors. Crude output is falling for the first time since 1998 and the inflation rate advanced more than expected in August, to near a five year high of 15 percent.

Still, unlike 1998, Russia is ``pretty well prepared'' to weather the turmoil, the World Bank's chief representative in Russia, Klaus Rohland, said today. The economy has grown every year for a decade and its international reserves have surged in the period by almost 50 times to $574 billion, more than any other country except China and Japan.

More Measures

The Finance Ministry yesterday's added $20 billion to the interbank lending market.

Sberbank, VTB and Gazprombank ``are market-making banks capable of insuring the liquidity of the banking system,'' the ministry said in a statement today. The government and central bank will take more measures to improve liquidity this week, the ministry said.

Finance Minister Alexei Kudrin said the measures should ``smooth over the shock changes'' in the markets. ``With foreign borrowing stopping, we must soften the impact with additional funds, then the situation will stabilize,'' he said on state television.

The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest decline of the 88 indexes tracked by Bloomberg. The dollar-denominated RTS halted trading after similar declines.

Sberbank has fallen 32 percent and VTB Group 47 percent this week.

``The primary objective of these measures is to inject liquidity to calm nervousness,'' Alexander Morozov, chief economist at HSBC Bank in Moscow, said by telephone. ``Hopefully other banks will be able to get this money via the interbank market and this should prevent the rise of rates,'' he said.

[millionairemind]

As fast as hot money comes in, they will leave...
They are not here to do charity for the locals, don't be the last one holding the baby.

The war in Georgia was a mis-calculated move...

Ghosts of '98 haunt Russia's Micex as exchanges close
By Andrew E. Kramer Published: September 17, 2008

MOSCOW: The Russian stock market has in recent years muscled its way onto the global financial stage, spawning dedicated hedge funds from New York to Stockholm and enriching a generation of investors in a remarkable oil-driven boom that is now drawing to a close.

For the second time this week, the Russian authorities halted trading after shares in banks tumbled, and the whole market fell more than 25 percent in two and half days before the indefinite suspension of trading shortly after noon Wednesday. That move immediately stirred memories of Russia's traumatic financial crisis in 1998.

Russian state television showed an image that could sum up the broader disaffection with emerging markets recently: a once-bustling trading floor in Moscow, all but deserted, its screens blank, while one trader sat fiddling idly with a computer mouse.

Still, the authorities are promising measures to bring a rebound, and they laid out some of those plans, which focused on improving the fortunes of three large state-controlled banks.

In a sign that the Russian bust, just like its boom, is traveling the exaggerated path of a volatile emerging market, the benchmark RTS index is down 57 percent this year.

Three nations pump $33 billion into money marketsBank of Japan leaves key rate; pumps $28.4 billion into economy
Today in Business with Reuters
U.S. rescue of giant insurer fails to stem market fearsEurope and Asia see U.S. as no longer practicing what it preachesHBOS may be acquired by Lloyds TSB
It fell another 6.39 percent Wednesday, before trading was halted. The larger, and more liquid, ruble-denominated Micex was down 3.09 percent before the authorities suspended trading at 12:10 p.m..

The Russian regulatory response has so far hewed close to orthodox economic stimulus policies, in spite of calls last week for the government to invest the sovereign wealth fund in domestic stocks to raise prices.

The Federal Service for Financial Markets opened the Micex exchange for a 30-minute session after its usual closing time, running from 6 p.m. to 6:30 p.m. Wednesday.

After this second closing, the Russian central bank chairman and the finance minister, who had huddled together throughout the day, announced a sharp reduction of 4 percent in reserve requirements for commercial banks. That would have the effect of allowing more money to circulate in the financial sector. The central bank chairman, Sergei Ignatyev, said relaxing reserve requirements would free up $11.76 billion.
Earlier, the finance minister, Aleksei Kudrin, said the government would deposit $44 billion in federal funds in commercial banks, also increasing liquidity.

"We can make do with more conventional measures," he said.

Taken together, the response - which rests on conventional support for the banking system - suggests that Kudrin and other economic liberals in the Russian government have won, at least for now, the policy debate here on how to respond to the crisis that was set off by falling oil prices and investor disaffection with Russia after the war in Georgia.

Still, Kudrin cautioned against expecting a quick recovery. "Rebuilding will take some time," he said.

And Russia is spending more on the military. On Tuesday, Vladimir Putin, the former president and now the prime minister, said 2.4 trillion rubles, or about $96 billion, would go to the military in the 2009 budget.

While global stock markets are down, the problems in Russia run deeper.

Russian stocks have fallen faster than would be justified by dropping oil prices or in response to U.S. financial turmoil, economists say.

Russia this summer had all this, but also a war in Georgia and a subsequent war of words with its Western trading partners.

The average price-to-earnings ratio for Russian stocks Wednesday was 4, according to Steven Dashevsky, chief analyst at Aton, a Moscow brokerage. In developed markets, this ratio can exceed 10.

Surgutneftegaz, one of the largest companies in Russia, was trading Wednesday at just over the value of the cash in its bank account, meaning investors valued its vast oil fields, thousands of employees and other assets as nearly worthless, under its current management and because it is based in Russia.

"Russia has the reputation of being one of the most trust-challenged places to do business in the world to start with," said Kenneth Rogoff, an economics professor at Harvard University. The war heightened those concerns, he said. "Rightly or wrongly, the conflict with Georgia was viewed as a retreat from connections with global markets and global standards."

[winston]

In a decline lubricated by falling oil prices and tension with the West after the war in Georgia, the Russian stock market is in its steepest slide since the 1998 financial crisis...

The drop has been so swift and dramatic that economists here are beginning to consider the possibility that in spite of Russia's large currency reserves and strong trade balances, the economic boom of recent years could be slowed by this sell-off.

Partly as a result of global economics, partly as an unintended consequence of the war, the benchmark RTS index has now lost 47.8 percent of its value since its peak in May, one of the sharpest drops for a major market in recent memory.

The underlying problem for the Russian stock market is that about 80 percent of its shares by value are of companies that export natural resources. Their products have historically seen boom-and-bust cycles. Additionally, the risk premium for investing in Russia has risen with the war.
– Reuters

[winston]

RUSSIAN STOCKS ARE GOING LOWER STILL By Brian Hunt:-

One of the great "boom and bust" markets we like to cover is (as predicted) in the middle of a giant bust.

The bust is in Russia... The benchmark stock index there has lost nearly half its value since May. Our frequent guest, the Templeton Russia Fund, has lost 30% of its value in just the past two months.

Even after such a huge decline, could things get worse for Russian investors? Absolutely. As legendary investor Jim Rogers says, "Markets often rise higher than you think is possible, and fall lower than you can possibly imagine."

We'll go one step further: A market can fall lower than you can possibly imagine... especially when the masters of that market use tyranny and theft to get things done.

Russian stocks trade off corruption headlines and commodity prices. The global economic weakness is bound to send those prices lower. Oil could go to $75 a barrel in short order... and the picture of Russian stocks could get uglier.

[-dol-]

It's not just Russia, all the other BRICs - China, India and Brazil are nursing huge losses.

BRICs were promoted to retail investors the past few years. Substantial profits (may be losses for those johnny-come-lately) have been wiped out this past few months.

[winston]

Maybe this would be the catalyst to push Russia up...

===================================================

Russia Pledges $20 Billion for Stocks, Cuts Oil Tax
By Lyubov Pronina and Maria Levitov

Sept. 18 (Bloomberg) -- President Dmitry Medvedev pledged $20 billion to support the Russian stock market and cut oil taxes to stem the country's worst financial crisis in a decade.

Medvedev ordered the government to ``immediately'' consider committing as much as 500 billion rubles to ensure ``the stability of the stock market,'' which was closed after the Micex Index lost 25 percent over three days. Russian shares traded in London surged and the interbank lending rate plunged.

The government will also slash duties on oil by a quarter after a decline in crude prices discouraged exports. The president's intervention followed a meeting in the Kremlin with central bank Chairman Sergey Ignatiev and Finance Minister Alexei Kudrin. Ignatiev also relaxed reserve requirements for lenders because of the turmoil in global markets, falling oil prices and capital flight following last month's conflict in Georgia.

``If no unexpected horrors happen, all these steps will defuse the problem of trust in the system,'' said Katya Malofeeva, chief economist at Renaissance Capital in Moscow. ``The big state-run banks still have lots of liquidity, but it was not spreading down through the system.''

The tax cut for oil exports will come into effect Oct. 1 and save producers and refiners $5.5 billion, Kudrin said. OAO Rosneft, the country's biggest oil company, climbed 21 percent to $5.70 in London trading at 11:02 a.m., while smaller rival OAO Lukoil advanced 9.6 percent to $58.10. Moscow's stock exchanges will open tomorrow after being halted by the market regulator.

Bank Auctions

The Finance Ministry said yesterday it will make $44 billion available for OAO Sberbank, OAO Gazprombank, VTB Group, the nation's biggest banks, for the duration of three months. VTB, the only one of the three that trades in London, jumped 17 percent to $3.35, the biggest gain since the state-run bank sold shares to the public in May of last year.

``We are counting on these banks and held consultations with them, so that they support credit for mid-sized and small banks, and support operations on the stock market,'' Kudrin today. The first auction for the banks will be held Sept. 22.

Finance officials around the world have struggled to restore confidence in markets all week as investors stockpiled money amid mounting concern more banks will follow Lehman Brothers Holdings Inc. into bankruptcy. The Federal Reserve today almost quadrupled the amount of dollars central banks can auction to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the 1920s.

Bonds, Ruble

Russian sovereign bonds dropped to the lowest in four years today. The decline in the government's 30-year dollar bonds pushed the yield 25 basis points higher to 7.13 percent at 5:01 p.m. in Moscow, according to prices on Bloomberg.

Credit markets in Moscow seized up after brokerage Kit Finance defaulted on some repurchase agreements, helping fuel ``panic'' in the market, said Marina Vlasenko, a senior credit analyst at Commerzbank AG in Moscow.

Kit agreed to be bought by ZAO Lider, which, like Gazprombank is a finance unit of state-run OAO Gazprom, the world's biggest producer of natural gas. Kit said today that terms of the sale were still being discussed.

Bankruptcy Concern

``The government doesn't want a known name to fail in the Russian market,'' Chris Weafer, chief strategist at UralSib Financial Corp., said by phone from Frankfurt.

Some of Russia's 1,200 banks will go bankrupt, said Richard Hainsworth, chief executive officer of RusRating, an independent bank ratings service in Moscow. ``It will be inevitable, but not as many as some people say.''

Kudrin said Sberbank, VTB and Gazprombank will channel an additional 60 billion rubles to brokers for repurchase operations with securities. ``This will also add liquidity and stabilize operations of the exchanges.''

The government ``is taking measures to guarantee the normal functioning of financial institutions,'' Medvedev said today.

Kudrin also said today that the ministry's regular auction of unspent budget funds will continue and that he expects demand for liquidity ``to decline somewhat'' because of the central bank's measures. The central bank cut reserve requirements for banks by 4 percentage points from today, freeing up 300 billion rubles for all lenders.

Banks borrowed today 17.4 billion rubles of the 200 billion rubles offered by the Finance Ministry for five days at an average interest rate of 7.91 percent. Banks also borrowed an additional 225.3 billion in the central bank's one-day repurchase auctions.

Ignatiev also pledged yesterday to keep the ruble steady within a trading band against a basket of euros and dollars as the global crisis and declining oil prices affect Russia.

The central bank sold about $3.3 billon last week to prop up the ruble, according to estimates by Evgeniy Nadorshin, chief economist at Trust Investment Bank. The ruble gained 0.6 percent to 25.278 per dollar today.

The Mosprime rate, a measure of overnight interbank lending rates in Russia, today retreated by 3 percentage points to 8.1 percent from a record, posting the biggest one-day drop.