Tags: russia

Russia's Financial System Faces Panic

Thursday, 18 Sep 2008 11:15 AM

Russia has fallen into a financial crisis just like developed economies, and the turmoil carries negative implications for the global economy.

On Wednesday, the government had to inject $44 billion into Russia’s three largest banks to prevent a meltdown in lending.

The stock market is in free fall, plunging 25 percent in just three days to a near-three-year low.

Today, Russia's Finance Minister Alexei Kudrin announced that Russian exchanges would be closed for trading until Friday, and that Russia's three largest banks will be getting an extra $2.36 billion to help shore up the financial markets.

And Russia isn’t the only emerging market in trouble. Brazil’s stock market has dropped 28 percent so far this year, Hong Kong stocks have fallen 36 percent, and the Indian market has skidded 35 percent.

These crashes have global implications because foreign investors have sunk huge money into emerging economies.

Now that cash flow is reversing as investors suffer major losses. Foreign investors have yanked $35 billion out of Russia since its war with Georgia began last month, according to BNP Paribas.

“I will tell my clients to continue to abstain from buying Russian assets,” Zina Psiola, who manages Russian stocks for Clariden Leu in Zurich, told Bloomberg.

Recall that Russia sent shudders through world markets in 1998, when the government defaulted on its debt and devalued the ruble.

As for the present, experts say investors should be cautious about returning to emerging markets.

“These are not safe havens,” Lars Christensen, head of emerging-market research at Danske Bank told The Wall Street Journal.

“When you're afraid of risk, these are not the markets you should expect to perform very well.”

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
StreetTalk
Russia has fallen into a financial crisis just like developed economies, and the turmoil carries negative implications for the global economy.On Wednesday, the government had to inject $44 billion into Russia’s three largest banks to prevent a meltdown in lending. The stock...
russia
276
2008-15-18
Thursday, 18 Sep 2008 11:15 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved