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The Russian Market has been shuttered until the 10th of this month, as the Kremlin tries to stop the bleeding. This is not capitalism folks.

With a rusted-out war fleet en route to visit Hugo Chavez, a potential bailout for the Icelandic Banking system, a few bomber incursions into Japanese airspace and the announcement that he has a Judo instructional DVD about to come to market, Vladimir Putin is doing his utmost today to project the image of a strong, resurgent Russia to the world. When you consider the fact that the Russian equity markets have been closed more than they have been open over the past two weeks as stocks there have continued their plunge despite repeated attempts by the government to inject more liquidity into the local credit system (a total of $186 billion in government funds have been earmarked for the bailout to date) this bear suddenly looks sickly.

As any hunter will tell you, a wounded bear can be much more dangerous than a healthy one –an animal in pain is less likely to behave rationally. As such Putin & co. must still be approached with absolute caution. If the Russian government leaders can’t get their way in free markets, they will be more than happy to take a page from their old KGB training manuals.

Ignore Mark Mobius and the other emerging markets “gurus” who have been crushed here. With a meltdown this severe and this global there will be LOTS of opportunities to find equal value in better markets - markets where the referees don’t change the rules halfway through the game.

Who knows, if the SEC’s Chris Cox & Co. are removed from power, the US might even become one of those markets.

Andrew Barber
Director