The market in a corkscrew

“Easy money” brought down Russian indices yesterday in the Russian stock market there was a real collapse. According to the results of the day, the fall of the RTS index amounted to 3.29%, and MICEX - all 4.35%. And this is only the beginning. According to most experts, in the near future the Russian market is waiting for another wave of fall. Analysts diverge only in what time it will happen and what it will be. Yesterday showed: realities can surpass any forecasts, even the most pessimistic.

Given the recent shocks in Shanghai and New York, analysts suggested that Russia was waiting for another wave of falling. However, experts diverged in how long it would happen. According to optimistic estimates, the market had several days, according to pessimistic - the fall should have continued right away. However, everyone agreed that the fall should not be deep. As the nearest support levels, the threshold in 1830-1840 points according to the RTS index was called.

But events began to develop according to the scenario of catastrophic. The breakdown occurred somewhere in two o’clock in the afternoon when the indices rolled down. Ringing went into the fall. And only the opening of the stock market in the United States at 17.30 Moscow time this fall ceased. Or suspended.

There are no clear and clear explanations of the causes of what happened. But, apparently, Russia became a victim of “easy money” - those that investors occupy in the same country at a low rate, and invest in another - in papers that bring them high income. The scheme begins to fold like a house of cards, as soon as the possibility of a profitable loan disappears.

In the near future, the Russian market is waiting for another wave of fall. Such was the most common forecast among domestic players according to the results of the previous days. Predicting the further fall, the experts diverged only in what time it would happen. According to optimistic estimates, the market had several days, according to pessimistic - the fall should have continued right away. However, both of them agreed that the fall should not be deep. As the nearest levels, the threshold in 1830-1840 points on the RTS index was called.

But yesterday has surpassed the most pessimistic forecast. Trading in the Russian market began with a small fall after Asian stock indices. Very quickly, however, the market received support from the side of the oil again (up to $ 62 per barrel of the Brent variety). But after 14 hours (in Moscow), the situation changed diametrically again.

The most strange circumstance of yesterday's trading is the time of the start of the market fall. Two hours in the afternoon have never been a serious indicator of a fracture during exchange trading. This usually happens when London opens (plus three hours by Moscow time) or New York (17.30 in Moscow). The only reasonable explanation of the time of the beginning of the fall is to summarize the results of the Asian exchange day. Apparently, it was these results that failed yesterday under Russian funds Russia became a victim of “easy money” from Asia.

Arrived!

Today, the global stock market is managed by the monetary market. In conditions when the transfer of funds from one country to another can be made in a few seconds, the temptation is too great for a professional not to use such an opportunity. Taking money in one country at a low interest rate, investors transfer loans to a country that strengthens the national currency and there are prospects for the growth in the value of the securities. In professional slang, this investment method is called Carry Trade. This mechanism has always acted. But, as a rule, he did not affect the collective investment sector. Everything changed when investment funds appeared on the financial market, which initially offered investors to play such a complex, but risky game. And when a lot of financial instruments appeared on the market, which allowed to “insure” the risky investment made, the depositors have an illusion of the relative security of such investments. In these funds (usually they are called hedge funds) poured a stream of funds of ordinary citizens. And if earlier the threshold of such an investment was millions or hundreds of thousands of dollars, now you can find such a “fund” and for much smaller amounts - dozens, or even just thousands of dollars. Similar funds began to grow in the world as mushrooms after rain, attracting the most bright and star managers with large commissioners. For each invested dollar, these managers occupied a dozen more, or even hundreds of other dollars on a suitable monetary market. Japan has become a favorite place for such loans in recent years. The discount rate here was 0.25%until recently. An insignificant value compared to 5.25% in the USA or Great Britain. In addition, the funds rely on the further smooth and calm fall in the course of the Japanese currency. But Japan woke up. The rate was increased to a mark of 0.5%. Then a crisis came on the Shanghai Exchange and, according to experts, led to an influx of money in Japan. The course of Japanese yen began to grow. Opportunities for lovers of "easy money" have sharply reduced. To save the money of depositors, they were forced to urgently get rid of their assets and repay loans. The prospects have changed. Now you need to bet on the strengthening of the Japanese currency.

Russian prospects

The current fall is not the limit. According to players, it is too early to talk about calmness in the market, and he is still ready to use any reason for a further rollback. Moreover, the “Chinese shake” continues and excites all world markets, including Russian. According to Alexander Potavin, the head of the analytics department for retail customers, the Entente Capital IR, American stock indices showed a very modest correction, which indicates the reluctance of overseas investors in the near future to restore their positions in the papers. However, the analytical review of Deutsche UFG says that the RTS index is unlikely to drop below 1700 points.

“Some global investors clearly know what he is doing, and actively plays for a decrease, and some succumbed to a group panic,” said Alexander Tolkachev, managing director of the Monitor Group. According to him, if this is really speculation, then the fall will last another two to three weeks. “Of course, the price will not return to the previous level. But when playing a decrease and there is such a task - to fix the market at levels that are more accessible to new cash injections. And since the Chinese market is overheated, it is made more accessible in this way, ”the manager explains.

“There is an excess of money on the market now, and there is such a volume that it is able to compensate for any oil drops,” says Alexander Tolkachev.

03/01/2007 / Evgeny Mazin, Alexei Tikhonov, the material was published in the newspaper No. 38 dated 02.03.2007.