Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.
Russia’s Micex Index dropped 14 per cent, having already slumped 20 per cent this week, before trading stopped at 11:05 am in Moscow. The exchange won’t reopen until October 10 unless the Federal Financial Markets Service says otherwise, Micex spokesman Alexei Gerasyuk said by phone. The Jakarta Composite index fell 21 per cent in its biggest weekly slump in at least 25 years, according to data compiled by Bloomberg.
Investors are fleeing on concern the worsening global credit crisis will cause more banks to collapse and push the global economy into recession, lowering the price of the commodities that drive developing nation economies. The benchmark MSCI Emerging Markets index is headed for its worst weekly decline since it was established in 1987 after falling 21 per cent.
“The market is in survival mode,” said Ralph Sueppel, chief economist at BlueCrest Capital Management Ltd in London, which manages $2 billion in emerging-market assets. “Concerns over liquidity, counterparty risk, and mark-to-market risk limits prevent institutional investors from doing what they are supposed to do: correcting misaligned asset prices by seeking a profit.”
Ukraine’s exchange was closed for the day before trading began, and Romania suspended its main bourse after a 9.5 per cent slide. Egypt’s benchmark CASE 30 Index plunged 14 per cent at 11:56 am in Cairo, according to the bourse’s website, after losing the same amount yesterday.
Medvedev Plan: Russia’s Micex Index has lost 66 per cent of its value this year, compared with a 62 per cent drop for China’s CSI 300 Index and a 44 per cent decline on India’s Sensex.
Russia’s dollar-denominated RTS bourse will stay shut “indefinitely,” RTS spokeswoman Varvara Inozemtseva said by phone. Regulators have halted stock trading 10 times since September 16 as President Dmitry Medvedev’s package of $186 billion in support for banks and companies fails to instill investor confidence that the government can arrest its worst financial crisis since its 1998 default and ruble devaluation.
