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On Monday, October 27, Russia's stock exchanges were closed.

The Federal

On Monday, October 27, Russia's stock exchanges were closed.

The Federal Financial Markets Service (FSFR) suspended trading on Russian bourses Friday and cancelled it on Monday due to rapidly falling market value. What sense is there in going to work when practically no one wants to buy shares?

On October 24, the MICEX index plummeted by 14.2%, or down to 513.6 points, and the RTS index, by 13.7%, or to 549.4 points. The Russian stock market has seen worse times, of course, but not recently. The last time the RTS and MICEX indices dropped this low was at the end of 2004, and before that, the summer of 1997.

The Russian market slide can be blamed on the panic that gripped stock markets in America, Europe and Asia after the United States fell into a recession as a result of its leading lenders going down and the subsequent withdrawals by major global investors.

The problem now is that no financial guru is willing to predict when it will all end. They will only say this: "The sharp fall in indices has been caused by investor fears of a continued global financial crisis." In other words, one fall leads to another.

There is no end in sight to the bad news. After the FSFR stopped the fall of Russian indices, the American stock exchanges opened but failed to offer any encouragement. The widely cited Dow Jones slipped by 3.6% on Friday. Japan's symptoms were worse on Monday, October 27. The Nikkei dropped 6.4% by the close of trading on Monday - a 26 year low.

In short, the world financial crisis has created a "black hole," and its core, made up of surviving global financial companies, is sucking money in from everywhere: New York, London, Tokyo, and Moscow.

Why the Russian market has fallen victim to this "vacuum cleaner" is that it is undeveloped, its trading volume is low and its indices can fall faster than the Dow Jones.

Global investors are not to blame for refusing to put money in Russian stocks - they are not ready to invest in any world exchanges. Many of them expect stock markets to fall further and are holding their money back to buy cheaper.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.


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