Russian invasion spooks investors

A048104110.jpgAfter further falls on Friday, the Russian stock market has plunged more than 30% since the country’s invasion of Georgia last month.

Investor confidence has been hit hard by the conflict.

Some international banks estimating that between up to $20bn (£11bn)in foreign capital has been pulled out of Russia in the last month alone.

Since the invasion the value of the rouble has slumped, reportedly leading to the central bank stepping in.

So whereas Russia may have got away with a slap on the wrist from Europe for its invasion, Moscow is being punished much more directly by international investors.

Analysts in Moscow say Russia is now seen as a risky place to invest and it will be a long time before confidence returns.

But Russia is not in any danger of imminent economic crisis.

More than $1bn a day flows in from oil and gas exports and Russia is sitting on foreign exchange reserves of more than half a trillion dollars, the third largest in the world.

But the financial fall out from Russia’s Georgian adventure may now be giving the Kremlin reason to pause for thought.

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