The Russian stock market experienced its most significant daily decline in the last four years on August 14. The MOEX Index fell by 4.29%, and the market lost approximately 250 billion rubles in capitalization.
This was reported by Delo.ua citing The Moscow Times, according to the portal PromPolitInform.
At the end of the trading session, the index settled at 2136.3 points. Over the last three days, the indicator has lost 8.4%, erasing half of the growth accumulated over the previous month and a half.
Reasons for the negative trend
The negative trend intensified following statements by the Minister of Foreign Affairs of the rf Sergey Lavrov. The official rejected the idea of freezing the conflict along the front line and threatened an escalation of actions in response to Ukrainian attacks, while also dismissing proposals for a truce in the Black Sea.
Analysts link the asset sell-off to rising geopolitical risks. Investors’ expectations regarding the lack of progress in negotiations with the US, which were previously relied upon, became an additional destabilizing factor.
Consequences for the Russian economy
Among the factors putting pressure on the market, experts highlight the high key interest rate and the slowdown of economic growth in the rf. There is a risk of an increasing budget deficit due to damage to infrastructure, which limits the possibilities for loosening monetary policy.
According to experts’ forecasts, if military tension persists, the index could drop toward the annual low of about 1898 points. In July, the Russian stock market already demonstrated a record series of declines that lasted 18 consecutive weeks.
Photo: Delo.ua
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