Investors quit Russia after Georgia war

Financial Times ^ | 8/21/08 | By Charles Clover in Moscow

[BurbankKarl]

Investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 rouble crisis, new figures showed on Thursday.

Russian debt and equity markets have also suffered sharp falls since the conflict began on August 8, with yields on domestic rouble bonds increasing by up to 150 basis points in the last month.

Credit conditions are to be discussed at next month’s “summit of oligarchs”, the Russian Union of Industrialists and Entrepreneurs meeting that former President Vladimir Putin held annually to discuss economic issues.

Vladimir Potanin, head of Interros, one of Russia’s largest industrial groups, has complained about the shortage of long-term credit to Mr Medvedev, the financial newspaper Vedomisti reported on Thursday.

The tight credit conditions have been exacerbated by foreign capital flight since the war. Data released by Russia’s central bank showed a drop in foreign currency reserves of just over $16.4bn in the week beginning August 8. This was one of the largest absolute weekly drops in 10 years, according to Ivan Tchakarov at Lehman Brothers.

[RadioCirca1970]

George Soros will sooooon be buying...

[AmericanMade1776]

no one wants to play with a bully

[Arkinsaw]

Credit conditions are to be discussed at next month’s “summit of oligarchs”, the Russian Union of Industrialists and Entrepreneurs meeting that former President Vladimir Putin held annually to discuss economic issues.

This is why Western nations need to present a united front and prohibit investment in Russia until they leave all of Georgia. And prohibit business travel. And prohibit Russian oligarch travel. And possibly start freezing assets.

These oligarchs do NOT want to go back to standing in line at GUM for toilet paper. And if we restrict travel they no longer even have the Crimea to vacation in.

Their economy is dependent on the West. Their only cash item....natural resources....are tied to Western sales. The West can recover Georgia if they ALL stop dealing with Russia as a business partner right now.

But they will not do it.

[1rudeboy]

This is one that Soros cannot “make up.”

[Redbob]

Anyone investing in russia while Putin is in power is an idiot.

[wk4bush2004]

“Their economy is dependent on the West. Their only cash item....natural resources....are tied to Western sales. The West can recover Georgia if they ALL stop dealing with Russia as a business partner right now.

But they will not do it.”

It seems, unfortunately, that most of the West are too chicken to stand up to Russia.

[marron]

You don’t invest in a country like Russia unless you have friends in high places.

Putin made his bones going after the so-called oligarchs, but in actual fact oligarchs are the only people who can prosper in this kind of situation. He wasn’t going after “oligarchs”, he was going after people who were economically independent. The ones who remain are dependent on his good graces. They are part of the ruling circle. They are oligarchs.

[frithguild]

soros staked his position long before this present issue came to the fore and he is making yet another fortune as we post

[ken21]

kewl!

[2banana]

The Russian ETF (RSX) was up today...

[RadioCirca1970]

Shorting Putin?

Has he got Puts on Putin?? lol

[Alia]

Thanks for posting this article. Two asidem interesting nuggets:

The tight credit conditions have been exacerbated by foreign capital flight since the war.

It's been called "a war". First time I've seen the term in print in re Russia/Georgia. Anywhere.

“The market is vulnerable to foreign capital flight,” said Kingsmill Bond at Troika Dialogue, the investment bank. “The major Achilles heel of the Russian market is that there is very little domestic long-term capital.”

[Stonewall Jackson]

Here is some interesting information about the side effects of the Russian-Georgian War that could have a potential impact on the war’s final outcome.

[BurbankKarl]

That is because it is the Financial Times in London. They also reported Georgia will remain split in two until someone does something about it.

We get both the Wall Street Journal and Financial Times at work....the WSJ is $230/yr, while the pink colored FT is $99/yr. They definitely have two different viewpoints...with the FT having shorter stories (no turning pages to complete them) and more succinct writing.

It is free on the web I believe. I usually take a peek before I go to bed, since they are publishing 8 hours ahead.

[Alia]

The WSJ and The Economist were standard daily reading for me for years. Thank you for the recommend: I’ll add The Financial Times of London to my daily read.

[Jeff Head]

The Russians should feel a lot of this tpe of economic fall out as a result of their aggression and it needs to be painful.

I also took note that rhe United States NAvy announced that it will have three of its military vessels in the Black Sea of the coast of Georgia this weekend tp perform humanitairan support for the people of Georgia. The guided missile destroyer, USS McFaul, the Command and Control Ship, and flagship of the US 6th fleet, the USS Mount Whitney, and the US Coast Guard, high endurance cutter, USCGC Dallas, will all be in place in the next few days.

The USS McFaul is a front line, major US Navy combatant. An AEGIS Destroyer, she is very good at anti-sub work, anti-surface work, and outstanding at anti-air defense. She's been loaded with all sorts of humanitarian supplies, and will be the first ship to arrive, probably Friday, th 22nd, or Saturday, the 23rd. Although she is there to help with humanitarian needs, there can be no mistake that she is also a sign of US resolve to assist Georgia.

USS McFaul DDG 74

The USS Mt. WHitney, is a large Command and Control ship, with l;ots of room for supplies of all types to support an emergency evacuation of thousands of people and can make over 100,000 gallons of fresh water a day.

As a Command Control, Communications, Computer, and Intelligence (C4I) vessels, she is a very critical asset to the US Navy. Considered by some to be the most sophisticated C41 ship ever commissioned, Mount Whitney incorporates various elements of the most advanced C4I equipment on earth and gives the embarked Joint Task Force Commander the capability to effectively command all units in the Joint Task Force. Her presence will provid tremendous humanitarian relief, but will also allow the US to monitor communications in the area and gather lots of intelligence.

USS Mount Whitney

The USCGC Dallas (WHEC-716) is a Hamilton class, high endurace cutter of the US Coast guard. These vessels are outstanding at marittime interdiction, port security, and Search and Rescue missions. She had been in Greece on a port call when called to this duty.

USCGC Dallas

Along with the Canadian and Polish vessels also in transit to Georgia, this task force will be well equipped for Humanitarian support, and for defending themselves if necessary.

[wardaddy]

you know....I’m no Buffett.

I own car washes and self storage etc....a real imaginative capitalist ...lol...doing exactly what Buffett says not to do....”low barrier of entry businesses”

but I would be leery of investing in Russia...trading yeah but investing no.

when I was young pup....I was heavily involved in trading and exploiting the third world wherever there was opportunity and good looking “nanny”.

today we probably would have gone to the old east block checking it out..buxomy long legged women with doe eyes and all that

Russia seems to be largely run by former commies who exploited their former aparatchik jobs in ministries and then took them public holding huge stock for themselves with little real or sweat equity and have fought to hold on or acquire more since

Putin really does run the world’s largest Mafia in my opinion.

Russians have always appreciated a firm hand...on themselves as well as outsiders.

[MarMema]

Oh my gosh, thank you for this post. You have made my day!!!

WHOO-HOO!!!!

[MarMema]

Thanks for the pics!!