Russia's Stock Markets Tumble To Lowest Levels in Two Years
Falling Oil Prices, Political Tensions Erode Confidence
By ANDREW OSBORN Dated: September 10, 2008

MOSCOW -- Russia's stock markets slumped to their lowest levels in more than two years as falling oil prices and geopolitical tension sapped confidence.

Moscow's ruble-denominated MICEX index tumbled 9.1%, its worst showing since June 2006, while the dollar-denominated RTS index skidded 7.5%.

Investors and analysts said the drop didn't appear to be driven by news developments so much as worries about Russia's economic and political outlook amid weak markets around the world.

"The political-risk premium is high, and we'll have to live with that," said Marcus Svedberg, chief economist at Stockholm fund manager East Capital, which has about $3 billion invested in Russia. "There seems to be a lot of forced selling."
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Here's the two nuggets that caught my eye:
The Economy Ministry predicts inflation will top 11.8% this year. The government's budget is based on a price of $82 a barrel of Russian Urals crude at a time when it has fallen to less than $100. It closed Tuesday at $97.76.
The Economy Ministry forecasts 7.8% growth this year, while the central bank is holding reserves valued at almost $582 billion.
These budget numbers can work for this year ($82 per Bbl. budget), assuming that forecast production levels are met. But the per Bbl. average yearly yield for this year is probably high enough, so unless it's a big shortfall, they'll be ok. But for next year's budget, that's a real issue. There's certainly going to be no level of tax reform on hydrocarbon production, not with those $80+++ a Bbl. budget costs, and likely increases on top of that.

No wonder Western investors (like BP) are moving their money out of Russian investments. The numbers tell you that it's pretty obvious who's next in line to be clipped.