It was just a month ago that Russian tycoons were buying houses for $750 million on the French Riviera. Things are suddenly looking a little different. FT:

Vladimir Putin admitted on Thursday that foreign capital inflows could fall by up to 45 per cent this year, but rejected suggestions that turmoil in Russia’s financial markets was caused by the conflict in Georgia.

The Russian premier said the country was simply suffering from the same credit crisis affecting the rest of the world, but he acknowledged that foreign inflows might fall this year from $80bn (€57bn, £46bn) in 2007 to $45bn or $50bn.

Mr Putin blamed Russia’s outflow of capital on “speculative” moves by western institutions withdrawing funds because of the “mortgage crisis” in the US and Europe…speaking to western journalists in the holiday resort of Sochi, he denied there was a liquidity crisis and rejected the view that the turmoil had “anything to do” with the Georgian conflict.

The stock market has fallen almost 50 per cent since May, and fell a further 2.7 per cent on Thursday. Alexei Kudrin, finance minister, said on Thursday that Russia was now considering using money from its $32bn national wealth fund and from pension reserves to support financial markets.

Using a SWF to shore up markets is throwing good money after bad. Could it be that the liquidations of all the sharpies who had been going long oil is the main event, or is it Georgia, or both together? A stock market that falls 50% in a few months bodes ill for a country that economically has been a one-trick pony.

This entry was posted on Friday, September 12th, 2008 at 6:29 am and is filed under business, General, War. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.