Russia Stock Markets Reopen, Surge and Close Again (Temporarily)

Source: http://russiatooat.blogspot.com/2008/09/russia-stock-markets-reopen-surge-and.html
Posted on Friday, September 19th, 2008 | In Economics, Russia

Contributed by: Edward Hugh (http://globaleconomydoesmatter.blogspot.com) -

Russian stock exchanges had to halted trading again today (Friday) for the fourth successive day running, but this time the explanation was a rather different one – since stocks rapidly surged higher, following President Medvedev’s announcement yesterday that the government was going to inject funds into the purchase of Russian stocks. Exchanges suspended trading after just hours of trading Friday after shares on the benchmark RTS and MICEX indexes shot up by 20 percent and 26.3 percent, respectively. Trading was only temporarily suspended and was expected to resume later today.

Stocks bounced back after the government rushed through a series of emergency measures — amounting to some $120 billion worth of relief — in the shape of increased liquidity to the banking sector and share purchases on the domestic markets. In fact Russia’s RTS Index, which had previously been the best global stock performer this decade, had turned into the world’s cheapest, at least on the price to earnings ratio measure, since at the time of closure it was valued at only 5.6 times the earnings of its 48 component companies, the lowest of any among the larger markets internationally.

Among the shares which surged the most were Russia’s banks, and VTB Group and OAO Sberbank, Russia’s biggest banks, benefited considerably from the perceived impact of the central bank decision to cut reserve requirements and the government pledge of up to $44 billion to shore up their liquidity. VTB jumped 1.63 kopeks, or 60 percent, to 4.35 kopeks, the biggest gain since the bank went public in the world’s largest initial public offering last year. Sberbank rose 14.2 rubles, or 49 percent, to 43.01 rubles, its steepest gain in 10 years. Trading in both stocks was suspended for one hour at 11:05 a.m. Moscow time after their exceptional gains. Sberbank was suspended a second time on the Micex Stock Exchange at 12:58 p.m.

For more details on the background to all of this please see yesterday’s extensive review on this blog.

Last 5 posts by Edward Hugh

Global Manufacturing, France Outperforms, As Spain Continues To Flounder - November 3rd, 2009
A New Spectre Is Haunting Europe, A Spanish One - October 31st, 2009
Beyond The Consensus On European Bank Credit - October 27th, 2009
The French Rebound Continues In October While Germany Moves Sideways - October 27th, 2009
The French Rebound Continues In October While Germany Moves Sideways - October 27th, 2009

Tags for this Post:
Bank, central bank decision, Economics, Medvedev, Micex Stock Exchange, Moscow, OAO Sberbank, RTS, RUB, Russia, Russia, Sberbank, USD, VTB Group

About Edward Hugh (http://globaleconomydoesmatter.blogspot.com)
Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance, and the underlying dynamics of migration flows.

Hugh is a founding member and regular contributor to a number of economics weblogs, including Global Economy Matters, Demography Matters and a number of others.

Edward 'the bonobo' Hugh is a Catalan economist of British extraction based in Barcelona. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again". He is currently working on a book with the provisional working title "Population, the Ultimate Non-renewable Resource".

Edward also writes regularly for the demography blog Demography Matters. He also contributes to the Indian Economy blog . His personal weblog is Bonobo Land . Edward's website can be found at EdwardHugh.net.

Edward follows in detail the Indian, Italian, Spanish, German and Japanese economies. He also has a more than a passing interest in the economies of Turkey and Brazil and in the emerging economies of Eastern Europe.