Driven down by Georgia’s assault on South Ossetia, the benchmark of Russia’s Trading System dropped 5.06 percent in the afternoon and the MICEX index lost 4.26 percent.
Photo: Vasily Shaposhnikov
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Russia’s Market Collapsed on War in South Ossetia
Driven down by Georgia’s assault on South Ossetia, the benchmark of Russia’s Trading System dropped 5.06 percent in the afternoon and the MICEX index lost 4.26 percent.
The slight morning decline in quotes gave way to another slump in the afternoon, pointed out Veldega analysts. No miracle has happened despite the positive movement of indices in Europe and the United States.
The best expectations are that RTS will close slightly above the August minimum, i.e. somewhere above 1,764. It is the most optimistic scenario, as it gives hopes for a new breakthrough in the nearest future. Another forecast is 1,700, but that value is the last stronghold of RTS en route to 1,450.
Political risks are at the maximum due to the combat actions in South Ossetia, the traders say. Investors are apprehensive notwithstanding the promising prices of Russia’s market, and the common sentiment is to wait for stabilization. But the situation will further aggravate if Russia’s relations with Europe and the United States finally decay, entailing the capital outflow.
As to the market performance, the decline will continue until the positions of Moscow and Washington are clear. “The depth of decline is difficult to forecast. The level of 1,800 on RTS is a very strong level, we are going down, but we haven’t broken it yet. If it is broken, the intense downward movement could be expected,” said Vladimir Detinich, who heads information and analytic department at OLMA.
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