Wednesday, October 8, 2008

A Note On The 14% Stock Market Drop In Moscow

Overnight, the Moscow MICEX stock exchange had the biggest decline of all exchanges worldwide. Could that be an unintended consequence of market intervention?

Moscow has a penchant for closing its exchanges whenever there is a severe decline. In the last few weeks, I can recall at least three times when they have done this. Perhaps the fear by Russian market traders that the exchange would again be closed caused them to sell immediately, instead of waiting around to see how great the downside action would be.

Of course, the Russian officials, true to form, then came in and closed exchanges until Friday.

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