RUSSIA - The local stock market in Russia fell back 10% in July on the back of higher market volatility ahead of the Duma elections in December this year.
Increased market volatility was expected, but not to the extent that the market could lose 10%. YukosSibneft, the Russian oil giant has much to do with the sudden drop, with shares falling 18% in July, according to Neil Gregson, portfolio manager at Credit Suisse Asset Management.
Recent turmoil centres on Mikhail Khodorkovsky, CEO of YukosSibneft who has strayed outside his business role to dabble in politics by contributing to various opposition parties and allegedly pressurising local officials and Duma deputies to support his lobbying efforts.
The arrest of Platon Lebedev, chairman of the Menatep Group which controls 61% of Yukos shares, on fraud and embezzlement charges has also rocked the market.
Russia continues to grow at around 6% pa, however sustained growth of this magnitude will to a large extent depend on the performance of the country’s oil corporations which represent 52% of the stock market.
At the end of the first half, the local RTS index had climbed over 40% in US dollar terms, rising 8% in June alone.
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