Russia Stock Exchange

Russia and the Stock Market World

Government action against Yukos has changed the Russian stock market (Russian Trading System, or RTS) scene in the short term, if not for ever! Prospects of free enterprise in the development of Russia’s natural resources have energized financial circles throughout the world. Indeed, many individuals have enjoyed extraordinary returns and appreciation on the Russian stock market during the recent past. Yet, concerns of government influence over the system, and it political overtones haunt domestic and international investors alike.

The Russian Government has done much to demonstrate that its action against the founder of Yukos was a one-off event, rather than any systematic attempt to lord over exceptional stock market winners in general, but world opinion is divided over the matter. How independent can private enterprise be in Russia, and will prominent individuals from the business world be persecuted in subjective manner? Some investment houses discount the risks, and reap rich dividends in the process, but the injection of capital in proportion to the immense potential of the country, has not been forthcoming.

The Russian Stock Market, Bereft of Government Interference, Has Immense Potential

Stock market values have shown such unprecedented appreciation during the recent past, that some analysts feel that companies do have inherent potentials to justify such levels. Such trends are generally representative of high market liquidity, and the extraordinary profits generated by trends in energy prices seem to influence Russian stock market trends. The upward movement of stock market prices needs sound development of local demand in diverse sectors for sustenance. Again, not all analysts have the same views on the future prospects of sectors other than energy.

The stock market culture is obviously new to a country which is so new to democratic functioning and development. The Russian Government has allied with its counterpart in Singapore to develop free trade zones in the country. Perhaps, this spirit of international collaboration can help develop the local stock market system as well. The international investing community will surely respond with alacrity to meaningful steps towards professional stock market operations. Already, Advance Depository Receipts and shares of top Russian companies participate in European and U.S. exchanges.

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