The Upside of Contagion

Every cloud has its silver lining.

That was my thought when I looked at a little-known side effect of global financial crisis. Because it has given the Russian market a wicked cross-check.

From their treatment of BP employees to the recent Georgian invasion, Russian behavior has been pretty aggressive. Moscow’s estimate of the Golden Rule—whoever has the gold, makes the rules—meant that they felt their immense oil wealth made them immune to world opinion.

But with falling oil prices, the Kremlin’s recent actions, and the global flight to safety, a lot of major players have walked away. In fact, many 2nd-tier firms are facing insolvency.

After spending hundreds of billions the Russian Central Bank could be downgraded. But if they conserve their reserves the spiral of lower stock prices and tighter liquidity probably will continue. Only a long period of responsible behavior could induce outside investors to return.

One of Russia’s favorite sports is hockey. For the Russian market, this global financial cross-check may have put them into the penalty box.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-03T21:14:48+00:00September 25th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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