Reuters reports:
Investors are also unnerved by the aftermath of the five-day war in early August. Russian shares have lost about a third of their value since hitting record highs in May. Russian and Western bank analysts polled by Reuters have cut forecasts for Russia’s gold and foreign exchange reserves.
As much as $25 billion in foreign capital may have left Russia since the Georgia conflict started, they said: while their growth forecasts were little changed at 7.5 percent, the crisis sharply cut the liquidity of the banking system. . .
The stock exchange’s benchmark RTS index, over half of it populated by oil and gas stocks which could have offered strong ‘buy’ opportunities for those keen to ride high energy prices, suffered its biggest decline since the financial crisis in 1998.
(Via Matthew Yglesias, via Marginal Revolution, via Instapundit.)
This comment at Marginal Revolution seems relevant though:
This is missing some other factors. In particular, the Russian government targeted and destroyed Mechtel (NYSE: MTL) by alleging that the company had engaged in price fixing. I think some of this sell-off can also be attributed to investors — many of whom are foreign — realizing that the Russian government can selectively liquidate equities by accusing them of corruption.
Internet Scofflaw 