Friday, July 25, 2008

Investors Know Who Runs Russia

An article in today's NYTimes notes the impact on the stock price of a Russian steel producer, Mechel, that was criticized by Prime Minister Putin. Putin gave a speech that was critical of the steel producer for charging higher domestic prices for steel than for its exports. The shares of Mechel are traded on the NYSE via American Depositary Receipts. The article notes that the market value of the companies shares which closed Wednesday at $36.61 in New York, tumbled $13.77 on Thursday to close at $22.84, wiping out $6 billion in value. Or, as the article notes, about $1.2 billion per sentence of Putin's speech.

What is interesting is that this points out that western investors believe that Putin is still in control in Russia. I have not checked what happened to the price of Mechel shares in Russia, but this belief is also widespread there of course.

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