Russian stocks suffer worst-ever one-day fall

The benchmark index on the dollar-denominated RTS stock exchange plummeted 19.10 percent to close at 866.39 points, 65 percent down from an all-time high posted in May this year.Â

"As an emerging market and major exporter of natural resources, Russia is in the centre of the storm," said Stephen Dashevsky, head of research at Moscow-based investment house UniCredit Aton.

"What we are seeing now is clearly exaggerated. Companies are trading at low single-digit multiples of next years earnings," he said, referring to a valuation method for stocks.

Among the worst losers was Russian gas behemoth Gazprom, down 24.42 percent at 5.20 dollars, number-two oil firm Lukoil, 24.16 percent lower at 40.50 dollars and top mobile operator MTS down 21.21 percent 6.50 dollars.

The record lows came despite the enforcement by regulators of two trading suspensions on the RTS and three stoppages for the ruble-denominated MICEX stock exchange, which ended down 18.66 percent at 752.00.

Analysts said the freefall was due to concerns that bailouts in the United States and Europe were yet to show signs of freeing up financing from banks.

"We cant see any silver lining," Alexei Trunyaev, another Moscow-based market analyst, said in a note.

Earlier in Asia, stock exchanges suffered a fresh mauling, with Tokyo sinking to a four-year low on growing doubts about whether a Wall Street bailout package can stem the global financial crisis.

Investors were spooked by signs of escalating problems in Europe after Germanys fourth biggest bank had to be rescued over the weekend, causing the continents stock markets to fall sharply Monday.

Roland Nash of Renaissance Capital, an investment bank in Moscow, said the Russian market had already digested the news of the multi-billion-dollar US bailout package before its approval by the US Congress on Friday.

"Unfortunately, markets need to be surprised for there to be an impact," Nash told AFP. "I don’t think anybody didn’t think that the package would be passed.

"Now you are in a situation when markets are trying to price the next leg of this economic crisis and that’s the economic impact," he said.

Another Moscow-based financial analyst, Chris Weafer of Uralsib investment bank, agreed, saying the focus of Russian investors was switching to the broader economy.

"There is the realization now of a recession and global slowdown," Weafer told AFP.

In Russia, "nobody is concerned about the banking sector for now (but) even if the banks have liquidity, they are not handing it out and companies are finding it difficult to access money.

"What this means is the business chain is beginning to grind to a halt," he warned.

Shares in Russia have fluctuated wildly in recent weeks, with regulators repeatedly forced to suspend trading and tighten controls in failed bids to stabilize the markets.

Such nervy fluctuations were exacerbated by doubts about the US bailout package as it faced a difficult path to Congressional approval last week.

The strengthening dollar and fears of slowing demand would "likely keep pressure on oil and other commodities. That will be negative for emerging markets, including Russia," Weafer said in a note.

The financial crisis, which started in the United States, has reportedly taken a major toll on housing and car sales in Russia, two closely watched sectors heavily dependent on bank financing.