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Cablegate: Russia's Stock Markets Continue Downward Slide in Wake Of

VZCZCXYZ0007
RR RUEHWEB

DE RUEHMO #4029 2281420
ZNR UUUUU ZZH
R 161420Z AUG 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2985
INFO RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS MOSCOW 004029

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/RUS, EEB/IFD
TREASURY FOR MEYER, BAKER

E.O. 12958: N/A
TAGS: EFIN ECON RS
SUBJECT: RUSSIA'S STOCK MARKETS CONTINUE DOWNWARD SLIDE IN WAKE OF
SUBPRIME WORRIES

1. (SBU) The benchmark RTS Index dropped 3.6 percent for the week
to 1829.64 near the end of the trading day on August 16. Losses in
Asian markets and lingering subprime concerns have prompted what
some observers are calling a "market event." Deutsche Bank Aleksey
Zabotkin maintains that, broadly speaking, Russian stock valuations
were well supported by the companies' underlying financial
performance. However, global liquidity questions and uncertainty
about the scope of the subprime issue have resulted in a revaluation
of emerging market risk.

2. (SBU) Many analysts have speculated that, barring an acute
external shock, the likely bottom for the RTS Index in the current
environment would probably reach 1850. The drop in the per-barrel
price of oil for much of the trading day, down nearly 3 percent, may
have dimmed the near-term prospects of Russia's oil-heavy economy,
thus adding to Russian investors' concerns.
RUSSELL

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