Yesterday (Thursday), the country ordered its main stock exchanges closed for another day, according to CNN. President Medvedev pledged a 500bln rubble ($20m) injection into financial markets to restore confidence in the economy – but not all is bad as the government has a huge cash reserve. Russian banks are also tightening their liquidity (Source: CNN).
The Russian stock market is reopening today (Friday).
The whole experience has proved that Russia is not immune from the ills that afflict other markets, reported the BBC. Oil prices, which are now falling, have also taken their toll. "We have sufficient reserves and a strong economy, which guarantees the avoidance of any shocks," President Dmitry Medvedev told a televised meeting of top officials in the Kremlin on Thursday.
Analysts estimate that $36bln in foreign investment has left Russia since early August, the Reuters news agency said earlier this week. Aside from global problems, and falling oil prices, there is another factor: politics. Russia's military conflict with neighbouring Georgia, the battle over the oil company TNK-BP and Prime Minister Vladimir Putin's criticism of the mining company Mechel - which resulted in a massive fall in its share price - have all made some investors decide it is time to leave Russia (Source: BBC).
So at yesterday’s Jetfin conference on Russia and CIS hedge funds (details here), attendees were more interested in the macro-economics of the region than in particular funds. And the speakers obliged.
The keynote of the conference was that of a negative outlook in the short term and a positive one in the long term. Someone said that the dirty secret among managers at the conference was that they were all facing heavy withdrawals from investors; “lots of funds will blow up before the end of the crisis.” Another manager said his Russia fund had just lost 25%. He added resignedly, “this is part of the game.”
As a reminder, here is a list of the former soviet republics (Source: TIME):
- The Baltics (North-West border of Russia) include Estovia, Latvia and Lithuania.
- Eastern Europe (West border of Russia) includes Belarus, Ukraine, Moldovia.
- The Caucasus (South-West) includes Georgia, Armenia and Azerbaijan.
- Central Asia (South) includes Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan.
The Commonwealth of Independent States (CIS), led by Russia, includes all of the above countries apart from the Baltic states, which are seeking strategic affiliation with the European Union.....
Source:Timely examination of macro context at Russia and CIS hedge funds conference
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