Collapse of Russian Stock Markets Caused by US Economy’s Expected Recession – Experts
Azerbaijan, Baku, 22 January / Trend corr. A. Badalova / The week began with the collapse of the Russian stock exchange market, which followed a rapid rate decrease in the world financial markets. A drop in stock quotations in different economic fields occurred in Europe and Asia.
Quotations drop in the Russian market constituted some 10% this week. The price for stocks of Russian companies dropped by 7%. The stocks of Gazprom dropped by 7.66% on 21 January.
Experts interviewed by Trend on 22 January connect the situation to the Russian stock markets with the expected recession in the US economy.
"The main cause, certainly, is the expected recession in the US economy, as well as a recent speech by the US President who wanted to set the minds of the world at rest," political scientist Azer Mursaliyev, who is the deputy editor-in-chief of the Russian newspaper Kommersant, said.
In his speech last week, the US President voiced his concerns about the situation in the US economy. Bush suggested tackling the economic crisis by decreasing the citizens' tax burden.
According to Mursaliyev, the United States' actions should be waited for. "Countries such as Russia and Azerbaijan with vulnerable economies, who depend on external factors, have to wait for the actions made by other countries. And this situation is deemed to steadily repeat," he said.
According to Alexander Potavin, the deputy head of the Antanta-Kapital analytical centre, the collapse was caused by the concern of market participants about the increasing possibility of recession in the largest world economy, which will cause a decrease in the economic activity rate of all large world powers, as well as new losses for larger corporations.
"At the beginning of 2008, the Russian market was trading better than Western ones. Now, the Russian market follows the dropping rate of Western markets, showing almost a collapse of quotations. Some large speculators just withdrew money from the stock market in order to avoid possible new losses," Potavin said.
"In the next two weeks all markets will be oriented to the US federal reserve system and the European Central Bank," senior economist at Alfa Bank investing company Natalya Orlova said.
According to Orlova, market collapse creates a potential risk of deterioration of the situation with bank liquidity, and changes may take place in the case of the Central Bank offering enough liquidity to the markets.
"In the first month of this year, the tendency connected with the US market will be descending," she said.