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The black Tuesday: the Russian stock market collapsed, the oil prices dropped

October 05, 2011, 12:32 UTC+3

The MICEX index fell down by 5.84% and the RTS index dropped by 5.17%

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MOSCOW, October 5 (Itar-Tass) — Tuesday ended in the collapse of the Russian stock market, when the oil prices went down lower than 100 dollars per barrel for the first time in six weeks. The MICEX index fell down by 5.84% and the RTS index dropped by 5.17%. According to the Russian Central Bank, the investors are getting rid of Russian assets, the capital outflow reached about 50 billion dollars as of October 1 with an annual forecast at 36 billion dollars.

The rouble exchange rate dropped by 22 kopecks, the US dollar reached 32.82 roubles per unit of currency by Tuesday afternoon, the Rossiiskaya Gazeta writes. The Russian currency had the same price in August 2009. The euro exchange rate went down only by three kopecks at the MICEX.

The most alarming tendency for Russian economy is an oil price downward tendency taking shape, the Novye Izvestia noted. According to managing director of the investment fund Roman Besedovsky, the current price at 100 dollars per barrel “is remarkable, if the price keeps going down, the budget deficit will grow.” This tendency is forming amid a vague financial policy after Kudrin’s dismissal. An analytical expert noted that former Finance Minister Alexei Kudrin supported the conservative policy to retain the growth of state expenditures simultaneously injecting the petrodollars in the reserve fund in case of the black gold prices going down. The expert noted that the most alarming tendency is the combination of a probable decline in the oil revenues with a breathtaking growth of state expenditures in Russia.

Managing director of the BKS Group Nikolai Solabuto cited by the RBC daily believes that the prospects in the Euro zone point to a likely default and many major banks are selling out their assets to recover their financial position. “If the banks sell out successfully their assets and level the balance, we will not drop by more than 20% down the current figures, while if a major European bank goes bankrupt we will witness a panicky sale-out similar to that in 2008,” Solabuto stated.

On Tuesday evening, the Central Bank made public the figures of the payment balance for the third quarter. This statistical report may make the Russian stock market to keep falling down and may weaken the rouble further, the Kommersant noted. According to the statistical report of the Central Bank, the capital outflow reached 18.7 billion dollars for the third quarter. This shocking figure has made 36 billion dollars according to the latest capital outflow forecast, which the Central Bank made. About 50 billion dollars have already drained by early October. About 13 billion dollars flew out in the second half of September 2011. Amid the September capital outflow level Russia forecasts it at 60-65 billion dollars with a slight capital outflow to continue in 2012 that does not sound too pessimistic.

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