Russia in outer darkness

In outer space, as everyone knows, the absence of the force of gravity produces the appearance of weightlessness. Everything floats away.

The markets have decided that Russia is now without gravity; its equities are without weight, and at risk of floating away. Late last year, the RTS, the principal stock market index, starting decoupling from the price of the principal Russian export, oil, as the latter started to plummet. The emerging market investment funds, which have also moved with oil and Russia’s other exportable commodities, also decoupled from commodity prices and the RTS.
Since the start of January, the RTS and the oil marker have been

in negative correlation. That means that even if the oil price goes up, Russian share prices go down. This is the equivalent of outer space.

It is no surprise, therefore, that everyone in the Russian market is gasping for an oxygen mask and a safety belt.

President Dmitry Medvedev and Prime Minister Vladimir Putin believe they are the constitutionally elected heads of government and imagine their government is the air supply and safety-belt of the state. Those officials aligned with them – Deputy Prime Minister Igor Shuvalov with Medvedev, Deputy Prime Minister Igor Sechin with Putin – like to think that, although elected by no one to nothing, they too are the safety belts, and pilots, of the state. Watch them closely – the more carefully Shuvalov brushes at his coiffure and Sechin draws his face into a scowl, the more you can be certain they think they are in charge of Russia’s mass, motion, weight, air supply.

Without a banking and state audit system accountable to parliament, without a parliament accountable to the voters, and with regional governors and mayors appointed, not elected, where else can the force of gravity be located? If not with them, then all of Russia has indeed decoupled, and equity is in danger of valuelessness.

That is what these oscillating lines on the dials of the national control-panel mean:

In fact, once decoupling commences, there is no telling what the control-panel indicates for Russia’s pilot enterprises – the dominant exporters and producers of value, such as Gazprom (gas and oil), Rosneft (oil), Norilsk Nickel (nickel, copper platinum group metals), Rusal (aluminum), Evraz (steel), Metalloinvest (iron ore), Polyus (gold), Uralkali (potash). That is because their public reports do not reveal the full extent of their debt; their shareholder stakes, pledges, and obligations; their margins; cashflow, and free cash; the ownership of their assets; their future.

Asia Times