Buried under the rouble [updated]

I posted recently on the financial cost Russia has paid for it's war with Georgia. Although this conflict has certainly had a significant affect on the current state of the RTS Index, it appears the downturn is part of a wider trend which began in May.

The New York Times presents the figures. Here are the headlines:

'The benchmark RTS index has lost 46 percent of its value since its peak in May, representing a paper loss of about $700 billion for Russian companies.'

'On Friday the RTS, which peaked in May at 2,487, rebounded slightly, rising 3.36 percent to close at 1,342. The country’s other main stock exchange, the MICEX, was rose 6 percent on Friday, after weeks of heavy losses.'

'...one indication that Russian politics lubricated the market slide here, however, investors have pulled nearly $5 billion this year from emerging market funds with a heavy Russia weighting, according to EPFR Global.'

'For next year, Russian officials are projecting federal revenue growth of 1.8 percent, compared with an estimated 13.8 percent this year. Just in the last week, the value of Russia’s hard currency reserves has dropped $8.9 billion. The ruble is down 6 percent since the war in Georgia.'

Why is this happening? Too much state ownership, too much manipulation, too much politics, too much violence and too much risk in the market.