Blue chips have plunged on Friday due to a major crisis on the US mortgage lending market. The situation could aggravate further, since this crisis has spilled other to other sectors. At present, we can hear experts mentioning the Asian crisis of 1997 which depressed the global economy and resulted in a default in Russia in 1998. This crisis shaped up on the mortgage lending market in Bangkok. If this crisis repeats in the US, it will damage the global economy even stronger. We will see the international stock indexes plummet as was the case in 1997-1998. Such periods of declines are replaced with stagnation when markets are hovering around their all-time lows during 14-16 years.
However, at present, we do not expect the domestic market to crash, since the situation with the budget in Russia differs a lot from what we had in 1997-1998. In addition, the US economy has always revealed its strength and we are not of the opinion that a repeated crisis on the Asian market could seriously damage the global economy. For this reason, we pin hopes on moderate losses on the Russian stock market. Most likely, a downturn will reverse and liquid names will rebound.
Nikolai Solabuto, Asset Manager, Finam Investment Company
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[Source: Russian Stock Market Blog]
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