http://www.bloomberg.com/news/2014-07-22/putin-misses-global-rally-as-micex-erases-28-billion.html
President Vladimir Putin’s meddling in Ukraine cost Russia dearly in financial markets. With the downing of Malaysian Airlines Flight 17, the toll is only getting worse.
The price to protect Russian bonds against default, already the highest among the world’s four largest emerging markets, has surged since the July 17 tragedy in eastern Ukraine. The Micex Index resumed its decline, putting the losses since Putin began his push into Crimea in late February at 4.2 percent through yesterday and wiping out about $28 billion in market value, even as stock gauges from the U.S. to India jumped to all-time highs.
Russia’s market slump is exacerbating an economic slowdown, the opposite effect of the wealth generation from stock rallies that are helping underpin growth across the globe. Russian Deputy Economy Minister Andrey Klepach said this month the $2 trillion economy posted zero growth in the second quarter when compared with the first. That follows a 0.5 percent contraction in the January-to-March period.
“The market is sending a signal that Russia should avoid becoming an outcast and avoid shutting itself out of global markets,” Aleksei Belkin, who helps manage about $4 billion as chief investment officer at Kapital Asset Management LLC in Moscow, said by e-mail yesterday. Putin “believes that what he is doing is justified and he is very much aware that he is not facing a united opposition in Ukraine. But it’s getting costlier with every month.”
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