Russian stock markets hit by US bailout vote; briefly halt trades
30 Sep 2008
The jolt given by the US congress in vetoing the $700-billion bail out plan, had its reverberations far off in Russia as the Federal Financial Markets Service intervened in the country's two major stock exchanges, RTS and MICEX as share prices dropped sharply.
While trading on RTS was halted within 16 seconds after opening, MICEX did not open for trading though Repo and negotiated deals that do not impact main index, were being made. Trading was allowed two hours later.
The short-selling ban was lifted on 26 September after it was imposed on September 18 when the markets went in a free-fall (See:Wall Street crisis spreads to Russia; stock markets in freefall)
The Russian regulator again suspended uncovered short-selling early in the morning.
The rouble-denominated MICEX exchange said in a brief statement that the Federal Financial Market Service ordered it to suspend trading until 12:30 p.m. Moscow time, as shares sunk in the opening minutes of trading.
A day before the US Congress failed to agree a rescue package, Russia's benchmark share index, the RTS .IRTS, closed down 7.11 per cent.
Russian state gas monopoly Gazprom led the decline when it shares plunged 7.8 per cent followed by state-controlled lender Sberbank by 7.6 per cent. Oil giant Lukoil fell by 7.5 per cent. and state-backed VTB bank fell 7.1 per cent.
The Micex Index fell 1.1 per cent to 1,008.77 within seconds of opening, while there was no change in the dollar-denominated RTS Index, but trading was halted shortly after it opened. The RTS said it would announce later as to when it would resume trading.
Earlier this month trading on the two exchanges was suspended on two occasions as share prices plunged which led to investors losing confidence. Since then, in a bid to ease liquidity, the Russian government had injected billions of dollars into the banking system.
Yesterday it said it would provide a further $50 billion to increase liquidity in the banking system.
The Dow Jones index created an all-time record for a single day trading when it lost nearly 7 points. Asian indexes also tumbled with the Japanese Nikkei falling by 4.63 per cent and the Hong Kong market fell by 3.36 per cent.
In India the BSE had reached a low of 12,153 points in the morning but recovered to 12,988 points by mid afternoon before closing at 12,860.43, up from yesterday's close of 12,595.
