RTS Index Takes Record Tumble
Russian stock markets lost between 9 and 11 percent yesterday, half of the total loss for the last eight days. It is also the largest fall since the arrest of Mikhail Khodorkovsky in October 2003 and the longest fall since April 2004. The RTS index fell 9.05 percent to 1318.5 points. The MICEX index lost 9.65 percent, and trading was stopped 15 minutes before the end of the day. The Kommersant index fell 10.7 percent. Once again, blue chip stocks took the biggest hit, with RAO UES of Russia losing 9 percent and Gazprom losing 12 percent. “You don't have to analyze crowd behavior. You have to avoid being torn apart by it,” commented FK Uralsib senior trader Andrey Kukk.
Contraction of markets in developing countries has been going on for two weeks and did not give in to hopes that it would stop Monday, when markets in Korea, Hong Kong, Istanbul, India, Brazil and Argentina fell. Investors are concerned about the possibility of interest rate growth in the United States, which would threaten emerging markets with an efflux of funds and slow the growth of the world economy. Alfa Bank analyst Angelika Genkel says that the Russian market is falling because of inertia after being triggered by mass sales on all emerging markets. AG Capital trader Mikhail Molodov added that the market had been overheated. He added that Russian speculators began to follow the example of Western investors yesterday and sell.
Alfa Capital analyst Ruslan Buslov thought that a class of investors “initiated the fluctuation themselves and they will decide when it will stop.” Another analyst, who wished to remain anonymous, thought that the fall was related to sales of Gazprom assets.
Traders say that the fall will in the end be beneficial to the market. “The market was overbought. A lot of money from not very experienced investors had entered it,” opined IK Finam general director Viktor Remsha. No one is any longer to guess at how long the fall will continue. Experience of previous years indicates that it may continue for months.
Sergey Tyagai, Alexey Baibakov, Vitaly Gaidaev
All the Article in Russian as of May 23, 2006
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