Pariah market

No...this article is not referring to our Bursa Malaysia.... it is about the Russian stock market. The market which has been holding up well from the beginning of the year has been tumbling down badly since beginning July. The downfall does not come as a surprise as the economic performance, fall in crude oil prices and the deployment of armies into Georgia are pulling the market downwards. The country seems to be in the wrong side of the road lately.

Bloomberg: Russia's RTS stock index is turning into the world's worst performer this quarter as tumbling oil, a war in Georgia and the probe of a steel company remind investors owning shares in the former Communist nation can be perilous. The RTS fell 22 percent since June 30, even after President Dmitry Medvedev halted the invasion of Georgia yesterday, sending the index up 3.5 percent. The retreat this quarter is the steepest among indexes in the world's 20 biggest stock markets, according to data compiled by Bloomberg. While the slump pushed valuations of the 48 companies in the index to the lowest level since March 2006, Firebird Management LLC, Credit Suisse Group's Clariden Leu and Banco Santander SA are avoiding the country. The government's investigation of steel producer OAO Mechel comes five years after the state's assault on OAO Yukos Oil Co., while its decision to send tanks into Georgia shook confidence in Medvedev. ``This bounce should be sold,'' said Ian Hague, the New York-based founding partner of Firebird, who reduced Russian stock holdings in the past three months to less than half of the $1.8 billion he had invested in countries that made up the former Soviet Union. ``Russia will be a pariah. It is a pariah. It's difficult to do anything other than reduce your exposure,'' Hague said yesterday after returning from Tbilisi, the Georgian capital.

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`Bad to Worse'

JPMorgan Chase & Co. cited the ``risk that non-conventional methods may be used to control inflation,'' when it cut Russian stocks to ``underweight'' last month. The New York-based bank also said that economic ``momentum'' was slowing in the world's biggest energy exporter. Russia's annual inflation rate was 15.1 percent in both May and June, matching the highest level in five years, data from the Federal Statistics Service show. The International Monetary Fund estimates the country's economic growth will slow to 6.8 percent this year from 8.1 percent in 2007. The Washington-based fund expects a 6.3 percent expansion in 2009, which would be the weakest since 2002. ``Unfortunately, the global and even the Russian macroeconomic picture is going from bad to worse,'' said Zina Psiola, who manages $1.1 billion in Russian stocks at Clariden Leu in Zurich.

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* ACA working hard....

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* Reuters: Japan's economy contracted 0.6% in the 2nd Q on quarterly basis....joining NZ, N.Korea, Ireland, Spain? ...more bad data to come out soon.

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* The Age: FDI in China rose 44.5% in the 1st 7 months of the year compared with the same period last year. During the last 7 months the FDI received amounted to USD60.7b. This item is one of the major contributor to China's hugh foreign exchange reserves which now stands at USD1.8T.

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* BT: According to Cargill Asia Pacific, the plunge in palm oil futures is directly linked to falling soya bean prices.