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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Is the West Manipulating the Russian Stock Market?

Stock-Markets / Russia Sep 28, 2008 - 01:52 PM GMT

By: Ian_Brockwell

Stock-Markets We have all seen considerable fluctuations on World Stock Markets before, but the recent fall witnessed on the RTS (Russian Trading System/Stock Market) has a hint of more than just a loss of confidence in the companies and Russia.

Since a peak in May of this year, we have seen a drop of 46 percent, creating a loss (on paper) of $700 billion! It seems odd that many of the companies hardest hit appear to be oil companies like: Rosneft, Lukoil and Gazprom.

Obviously, the fall in oil prices has an effect on profits, but this applies to all oil companies, not just Russian ones. Yet for some reason investors feel that Russia´s oil companies are a higher risk?

Some have suggested that the recent deal between BP and TNK-BP has done little to help the situation, but one must understand that doing business in Russia has changed since Boris Yeltsin was in power. Investors are still very welcome, but gone are the days when foreign companies could take an unfair proportion of the profits (especially if it involves Russia´s natural resources). But this rule applies in most other countries as well.

Although the RTS has seen a steady fall since May (also witnessed on other Stock Markets) it is curious that the shares started to tumble at an accelerated rate soon after the Russia/Georgia conflict, although not that quickly afterwards (18 days later to be precise), giving the impression that there was either a delayed reaction, or some pressure was applied to sell?

Many leading figures in the West have commented that the current Stock Market fall will hurt Russia more than any sanctions that the EU could impose, and you have to wonder whether this occurred by accident or design?

If investors are truly worried about the stability of Russia and the companies that have been attracting investment (even when oil prices were lower), why have they waited until now to "panic"?

Everyone knows that the Russian oil market is booming and the demand is still growing at a very healthy rate. For an investor to sell shares in this market can mean one of only three things: They don´t know what they are doing and like losing money. They are being poorly advised about the current situation in Russia, or they are being politically pressured to sell shares that have been very profitable for them.

As unlikely as it seems, the latter appears to be the case. The BP and TNK-BP dispute has been going on for a long time and oil prices have been falling for many weeks, yet this had no additional effect on the Russian Stock Market. Even at the peak of the conflict between Russia and Georgia, the prices remained reasonably stable. So what could possibly have happened in such a short time to change that?

However, there is a "silver lining" to all of this. There is no doubt that the share prices will recover and we can expect to see a sharp increase very quickly, providing some fantastic profits for buyers who are not frightened by the press reports, or maybe "influenced" by politicians.

Whilst the growing financial crisis in the US and Europe will have some effect on Russia, it is safe to say that this will be to a much lesser extent. So if you are looking for a good investment and a generous return, Russia is still a good bet!

By Ian Brockwell

Ian Brockwell is the creator of and interests include writing, teaching, politics, climate change, UFO reports, businesses of all descriptions, medicine and generally trying to enjoy life. Profindsearch is a very small search engine, which hopes to be a Google one day! (We can all dream)

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28 Sep 08, 15:04
Imperialist Manipulation

these is no question that the imperialists have not and will stop at nothing in manipulating whatever they can.

06 Oct 08, 14:38
Let them eat oil cakes.

Borcht Slurping Steppe Peasants.

07 Oct 08, 10:49
Conspiracy theories

Imperialists hahaha you give them way too much credit. Consipracies over the west causing a collapse in the russian stock market. You should write an article about China creating the housing bubble in the USA so they could buy land at a cheap price when the bubble pops.

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