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Russia's stock exchanges shed 9 percent

Russia's stock exchanges shed 9 percent

Russian shares suffered another mauling Thursday due to growing concerns about the banking sector and plunging oil prices.
The MICEX index shed 9.1 percent to close down at 626.9 points, while the RTS index plummeted by 9.5 percent to 713.9 points. Both indexes shut down trading for an hour during the day to stem deep falls.
Russian stocks entered another volatile day after crushing drops on Wall Street and Asian markets and a plunging price for oil, the backbone of the Russian economy. Urals oil dropped to US$66 a barrel on Thursday. Brent crude also traded under US$70 a barrel.
"If the price stays below US$70 or falls much further, then the investment case for Russia will deteriorate even more rapidly, sending both the RTS index and the ruble even lower," said Chris Weafer, lead strategist at UralSib bank, in a note to investors.
Domestic markets have suffered a cataclysmic few weeks, pushing the dollar-denominated RTS to a record one-day loss earlier this month.
The RTS is down 71 percent from its May peak, while the MICEX, where most trading takes place, is down 67 percent since May.
Mikhail Kasyanov, a former prime minister turned Kremlin critic, launched a stinging attack on the Kremlin's ability to navigate the crisis.
"Russia is going to find it harder to survive this crisis because we have an undiversified economy," he said in an interview published Thursday in the Novaya Gazeta newspaper.
"But if we can keep our only 'competitive advantage' _ a high price for oil _ Russia might again to be able to throw money at all its problems," Kasyanov said.
Analysts said there is growing evidence of stress in the banking sector and the real economy, as industries lobby for a chunk of the bailout funding promised by the government.
At the same time, the Kremlin has also been pouring money into defending the ruble, pushing its foreign currency reserves down US$15.5 billion last week. The Central Bank said Thursday its foreign reserves had dropped to US$530.6 billion.
Late Wednesday, Gazenergoprombank _ which is reportedly controlled by Gazprom _ said it would acquire mid-sized lender Sobinbank with the help of the Central Bank for an undisclosed sum. This followed earlier moves by state entities to rescue KIT Finance, a boutique investment bank, and Svyaz bank.


Updated : 2021-10-17 01:18 GMT+08:00