11 May 2004 11:02
Blast highlights risk to Russian stability
Moscow shares wiped out their 2004 gains on Tuesday as a broad sell-off in emerging markets was compounded by worries
over domestic security and growing state intervention in the economy.
The dollar-denominated RTS1 index fell 4.1 per cent to 576.63 on the first trading day after Sunday?s bomb in Grozny
killed Akhmad Kadyrov, the Chechen president.
The retreat followed selling of Russian stocks listed abroad on Monday a market holiday in Moscow and took losses
since all-time highs set a month ago to more than 25 per cent.
One trader summed up the mood by saying that the market?s sense of stability had disappeared after the Grozny
blast.
The bombing added to concerns over higher US interest rates, which run the risk of cutting off the supply of cheap
liquidity to emerging markets.
Meanwhile, high profile corporate rows, such as the $3.5bn tax battle between the government and Yukos and an attempt
to reprivatise a power plant of Unified Energy System, had also dented confidence.
By contrast, some analysts note that Russia?s energy-heavy market could gain some support from continuing high oil
prices, which last week touched 13-year highs.
The money being made in Russia?s natural resource profit centres constituted the best antidote to the present
correction, one analyst said in a note to clients.
[FT.com site] |
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