More than $260 billion has been wiped from the wealth of Russia’s billionaires over the past eight months as the credit crunch has sent the value of its currency and its largest industrial groups plummeting, according to one of Russia’s largest private banks.
The meltdown in the private wealth of Russian oligarchs including aluminium magnate Oleg Deripaska, Chelsea-owner Roman Abramovich and steelmaker Severstal chief Alexei Mordashov, reflected a 68 per cent slide in Moscow’s benchmark Micex share index since it peaked in May last year.
Andrei Sharonov, managing director of banking group Troika Dialog and Russia’s former deputy minister of economic development, said the oligarchs had suffered an unprecedented collapse in their wealth.
Speaking on the sidelines of the WEF in Davos he said a handful, including Mikhail Prokhorov, had managed to dodge the worst of the crisis.
He sold out of his 25 per cent share in Norilsk Nickel for cash in April, just before the market’s collapse.
Today the Micex index was trading at 622, down from a peak of 1944 on May 19, 2008.
The rouble has fallen around 27 per cent over the same timeframe, said Mr Sharonov.
“In terms of public opinion these guys are not heroes so it’s not something that arouses much pity.”
The global credit crunch, war with Georgia and falling oil prices prompted foreign investors to pull $74 billion out of Russia at the end of last year.
But despite the lack of popular sympathy for Russia’s business elite, Mr Sharonov said the country was now facing a profound economic crisis, with soaring unemployment raising the spectre of social unrest this year.
“This situation is a very serious challenge to any government,” he said. “The mood of the population is not improving.”
Mr Sharonov’s comments came as Russian Prime Minister Vladimir Putin addressed the economic crisis in his opening address to the WEF.
He said Russia had been “seriously affected” but claimed that its large foreign reserves, built up during the period of record oil prices, were providing some cushion.
Russia’s foreign reserves now stand around $400 billion although they have still plunged by nearly $200 billion since they hit a peak of $598 billion in August.
Mr Sharonov said the country's economic troubles could be compounded by the weak state of its energy sector.
The falling price of crude oil is undermining investment in the country's oilfields, which in turn is likely to hamper future production and therefore tax revenues, he said.
He still expressed long term confidence in Russia's economy. He said Russian assets were now very undervalued, which was eventually likely to draw in fresh investment while its large internal market was also an attractive long-term bet for foreign companies.
Russia's 260 billion dollar economic meltdown
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Originally Posted by Sidmen
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). this is true, but so what? same is true for your beloved Norway. stop shaking the empty air.
