On Wed, Aug 07, 2002 at 04:25:30PM +0400, ChrisD(RJ) wrote:
> Russians stuff 80 billion dollars under mattresses: watchdog
> By Dmitry Zaks
>
> MOSCOW, Aug 6 (AFP) - Russians have nearly 80 billion dollars "stuffed
> under mattresses" -- more cash than in US circulation -- which is now
> trickling into stocks amid improved trust in corporate governance, Russia's
> securities watchdog chief said Tuesday.
>
> The figure is almost double the Russian central bank's current gold and
> hard currency reserves of 43.6 billion dollars.
>
> "Our latest estimates show that between 75 and 80 billion dollars are, so
> to speak, being stuffed under mattresses," Igor Kostikov, chairman of the
> Federal Commission for Securities Markets, told a group of Western
> reporters in Moscow.
>
> "Some of this money has started to come (into securities) since May last
> year," said Kostikov. "More and more, (Russian) individuals are starting to
> invest."
>
> Russians had long been keeping their savings in dollars, leery of their own
> national currency after being bitten by a string of devastating
> devaluations and bank collapses in the last decade.
>
> Yet Russia was also the star performer last year among emerging markets, in
> large part due to handsome profits reported by its oil and natural gas
> giants that came on the back of peaking energy prices.
>
> Kostikov thinks some lessons were picked up in those glory days. Oil prices
> have since sagged but the Russian stock market continued to hold its own
> until July when it too went into a tailspin along with New York and
> European share markets.
>
> The Russian market's capitalization has dropped off from 137 billion
> dollars (141 billion euros) to 110 million dollars over the past six weeks
> -- although it still represents 70 percent of all volume traded in Eastern
> Europe, said Kostikov.
>
> "US security fund managers have been quitting (the Moscow market) -- but
> this really has nothing to do with us," stressed Kostikov.
>
> "The Russian economy is hardly dependent on fluctuations in (Western) stock
> markets," agreed former presidential economic adviser Vladimir Mao.
>
> "If we pass this period without doing something stupid, there will be a
> powerful stimulus for an influx of foreign investment into Russia," Mao
> told the government's Rossiyskaya Gazeta.
>
> Kostikov for his part touted Russia's recent advances in establishing some
> semblance of the rule of law to the post-Soviet business world.
>
> And he took particular pride in its new "corporate governance code" that
> provides a 117-page standard for proper relations between owners and
> managers.
>
> The code would be adopted by companies on a voluntary basis -- but
> investors will then be able to defend their rights through Russian courts
> once the code is incorporated in the company's statute books.
>
> Natural gas giant Gazprom was among the first major companies to adopt the
> code, said Kostikov.
>
> But the code still fails to address many problems -- including insider
> trading -- that can only be prosecuted through criminal statutes that are
> not yet a part of Russian law, said Kostikov.
>
> "Foreigners have far more experience using insider information than the
> locals," said Kostikov, adding he expected parliament to examine the
> long-delayed legislation this fall.
>
> In part confirming Kostikov's rosy outlook for the Russian market and its
> ability to absorb some of the billions of loose Russian cash dollars, a
> poll issued this week put the local ruble as the country's most-trusted
> currency.
>
> About 37-percent of respondents said they preferred to keep their savings
> in rubles while 35 picked dollars, according to the Public Opinion
> Foundation.
>
> However, Kostikov also agreed with the argument that Russian securities
> were reviving in part because the country still lacked a functioning
> banking sector and companies had few other options but to issue shares if
> they wanted to borrow fast cash.
>
> "The share-issues over the first quarter of the year have been greater than
> for all of last year," he said.
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu