Moscow’s bear market mars Georgian war


Russia called a halt to its incursion into Georgia, as prexy Dmitri Medvedev declared, in so many words, “Mission accomplished!”

Bad news for the Russkies. That means at least five more years of war, if George W. Bush‘s similar declaration in May 2003 is a harbinger.

For now, though, the Russkies just had to back off — or at least say they were. As Vlad “The Paler” Putin‘s troops marched through Georgia, Moscow’s stock market started plunging.

Who says a globalized economy is all bad?

Here’s how Kommersant, in Moscow, describes it this morning:

The continuing conflict between Russia and Georgia led to a 4-percent plunge in the Russian stock market at the beginning of the day yesterday . . .

Experts say the main cause of the drop in the ruble was the massive selloff of Russian securities by nonresidents, who converted the rubles from the sales into dollars. Currency investors also influenced the rate. “There were many investors who were oriented toward the strengthening of the rubles, and now those perspectives are clouded,” an analyst commented. Between the beginning of the year and Friday, the ruble had gained 3.6 percent against the dollar.

At around 1:00, news wires began carrying a statement by Russian President Dmitry Medvedev that Russia had completed a “significant part of the operation to enforce peace in Georgian and South Ossetia” and Tskhinvali was under the control of peacekeepers. Then there were reports that Georgian President Mikheil Saakashvili had signed a ceasefire plan.

The indexes began to rise.

The New York Times‘s David Jolly basically had the story yesterday. It would have gotten wider play if his editors had only connected the dots between war and markets a little more closely and lifted the piece out of the business section. Under the lame, overly cautious hed “Investors Struggle With the Uncertainty of Fighting Between Russia and Georgia,” Jolly wrote:

Markets in Moscow fell sharply for a time on Monday and then recovered after an escalation in the fighting between Russia and Georgia raised concerns among investors that the conflict might endanger Russia’s economic relations with the West.

Stocks dropped 5.7 percent at the open, to their lowest level since September 2006, as Russian troops crossed into Georgia amid heavy fighting, and Russian planes bombed targets across Georgia.

But stocks rallied after the Russian president, Dmitri A. Medvedev, said military operations in South Ossetia, the area in dispute, were nearing a conclusion.