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MOSCOW. (Anatoly Gorev, financial analyst, for RIA Novosti)

Global markets are beginning to recover after last week's drop in share prices, concern over the so-called "Chinese crisis" seems to be subsiding, and it turns out that it was not a full-fledged disaster of the kind that no market is protected against.
It was rather a speculative attack at a time of "bad" news from Southeast Asia. Yet for many observers, it is still unclear why the triumphantly growing Russian stock market reacted to these developments so sensitively: its capitalization sank by almost $100 billion in the four days of decline. Will it be able to recover?
For Russian market players, the start of the fall seemed innocuous enough. Early last week the Chinese government said it was worried about the excessive growth of the local stock market, which soared by 200% last year alone. It was not the first time it had voiced these concerns, but this time it decided to take measures in order to curb buyers' enthusiasm, notably, by introducing restrictions on the purchase of stocks. Although it talked only about drafting and considering a corresponding resolution, investors took it as a cue and began selling stocks.
First they got rid of shares from China, then from Southeast Asia and, finally, from all emerging markets, a category where Russia, despite its high sovereign investment ratings, still belongs. As a result, the benchmark Russian stock index, the RTS, fell from an all-time high of 1,971 points, reached on February 26, to 1,737 points on March 5.
The situation called to mind two recent events, experts say. One of them is the Asian financial crisis of ten years ago. The other is last year's developments, when the Russian stock market, which had been growing unhindered, tumbled last April for no apparent reason and continued its downward movement for about a month. At that time, the RTS index lost 30% against the peak it had reached before the decline began.
What the Asian crisis and present developments have in common is that the trouble once again came from Asia, and again hit like an avalanche: a slump that began on a local market spread to neighboring countries. The similarity with last year's events is that the 2006 fall was also triggered by innocent reports about Indonesia's plans to adjust its economic policies. This, however, resulted in a decline both in Indonesia and on other emerging markets, including Russia.
But here the differences begin. The Asian crisis of 1997 resulted in a deep depression on the Russian stock market, on which trading almost stopped because of a mass outflow of investment. The Indonesian crisis, however, brought about only a short-term correction, even if a rather deep one, after which the market resumed its growth at the same pace as before. It increased by over 70% by year-end, and their considerable profits almost made investors forget about the May decline.
Which of the scenarios is at work now? Will portfolio investment flee Russia or will the market respond to external irritants for a short time and then go back to doing what it has been for several successive years, reaching new heights on the RTS?
Experts are optimistic. Obviously, all macroeconomic factors, from high global oil prices to the rate of GDP increase, contribute to the market's further growth. "There are no serious reasons for a long-term correction," said Angelika Genkel, an analyst with Alfa Bank. What we are seeing now is rather a speculative correction, which is more than profitable for large investors able to shape market trends. The current massive sales will push the price of stocks down, and they will be able to buy them cheaper. This goal is well worth a bit of exaggeration about a "dangerous" Chinese crisis and its "fatal" influence on not only Russia but all global markets.
Analysts with the investment company Deutsche UFG also believe that the current decline in Russia is speculative and that market players will be able to buy Russian stocks at a more attractive price within the next one or two months. But the Chinese crisis will not be able to influence Russia for longer than that: because of its relatively low capitalization and remoteness from the world's major stock exchanges, the Russian market lives its own life and usually does not respond to outside impulses for long. The RTS index may lose another 100 points, but it will not plunge further, says Anton Tabalkh of the Uralsib investment company. "Judging by recent falls, they last for about a month," he said, referring to April-May 2004 and May-June 2006.
The opinions expressed in this article are those of the author and do not necessarily represent those of RIA Novosti. -0-