Russia - Putin Labels Markets 'Unfair' - by Courtney Weaver
Prime Minister Vladimir Putin described the effect foreign markets have on domestic share prices as "unfair" during a government meeting Monday, saying the values of the securities do not accurately reflect those of the companies themselves. Putin also spoke out against insider trading and again blamed the West for the country's economic difficulties, adding that those trading on domestic exchanges would be compensated for financial losses, Interfax reported. "Decisions concerning which securities to buy or sell on Russian markets are, for the most part, made abroad," Putin said, the news agency reported. "Moreover, the criteria by which these decisions are made have very little connection to the actual state of our economy or Russian companies." At the same time, he was careful to point out that the country did not want to exclude foreign investors. "No one is preparing to limit the activities of foreign capital in the Russian stock market — we welcome foreign investors," Putin said. "But at the same time, the task lies in properly building a large class of domestic investors as a powerful and capable financial institution of its own."The lack of domestic investors is clearly a problem and shares in Russian companies trade at levels below what might be expected given their fundamentals, said James Beadle, director of Pilgrim Asset Management. "On the face of it, Putin is completely correct — I think a lot of the market's reaction has had nothing to do with the Russian economy," Beadle said. "But Russia's situation has been, as we know, worse than most emerging markets.
Vladimir Milovidov, head of the Federal Financial Markets Service said, "I don't see any clear obstacles to the creation of such a system of compensation based on the idea of the Deposit Insurance Agency," Milovidov said, although he added that the question would require further consultation with various ministries and departments."
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