Russia rattles investors
Investors are getting nervous about Russia. Stocks slid by almost 30% to a two-year low this quarter. And the crisis in Georgia has prompted investors to pull their money out, with foreign exchange reserves sliding by $16.4bn.
Russian stocks have slid by almost 30% to a two-year low this quarter. This week, investors have been rattled further by the news that Russia has opted to recognise the independence of Georgia's two breakaway regions, signalling a further deterioration in Russia's relations with the West.
With the newly-confrontational relationship between Russia and the West set to endure, the perception of risk in Russia will stay high, forming a "negative backdrop for asset valuations", says Chris Weafer of Uralsib. Meanwhile, the Georgia crisis prompted investors to pull their money out of Russia at the fastest rate since the 1998 rouble crisis, with foreign exchange reserves sliding by $16.4bn in the week beginning 8 August.
Russia has ample foreign reserves, but with the rouble now no longer a one-way upward bet, due to the Georgia crisis, Russia may find it more difficult to control inflation through currency appreciation, says Peter Burnham in the FT. Yields on domestic rouble bonds have risen by 1.5% in a few weeks, so companies are finding it harder to raise money.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Then there's the hounding of BP and Putin's attack on Mechel, which has revived fears over property rights. Russia may be cheap, but don't count on a quick turnaround.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
What is the 25x retirement rule and does it work?
The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?
If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about