Moscow's bourses in trading freeze

Oct 10, 2008, 10:03 GMT

Moscow - Russia's market authorities still had not opened the MICEX and RTS exchanges for trading Friday afternoon after US stocks tumbled to five-year lows and world markets sank on fears of a recession.

The Federal Financial Markets Service said Friday it suspended trade indefinitely on both indexes 'in view of dramatic breakdowns on stock exchanges in Europe, Asia and the United States.'

Moscow's bourses have been assailed not only by the global financial crisis, but undercut by their reliance on energy commodities, with the drop in oil prices and a war with Georgia two months ago that spooked risk-averse investors.

'Investors will not return to the markets until the price of oil finds some floor, ie it stops falling, and the US equity market stops behaving as if tied to a theme park ride - one of the scary ones,' Chris Weafer, chief strategist at UralSib, said in a note to investors. 'Russia risk is a fringe luxury that most global investors will avoid for now.'

The MICEX, where most of Russia's trading takes place, was frozen twice in the previous session and 12 times in the last three weeks as Russia faced its worst financial crisis since the 1998 ruble default.

But Moscow's bourse rebounded Thursday, the first time in a week, with the MICEX gaining 9.8 per cent to 700.37 and the benchmark RTS closing up 11 per cent to 844.75.

Analysts at Moscow investment banks Alfa Bank and Renaissance Capital said market regulators were trying to play up Thursday's good news and keep the markets closed amid the worst of the financial turmoil, but said the strategy was adding to investors' uncertainties.

The Kremlin has pledged over 180 billion dollars in loans to state banks and small lender in an effort to stave off the liquidity crunch.