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Russia's Richest Hit Hardest by Financial Crisis

October 15, 2008 8:52 AM

By CLARISSA WARD, Correspondent, ABC News Moscow

Russia has suspended trading on one of its stock exchanges yet again today. By now I have lost track of how many times Russia has taken this measure, but suffice it to say that it happens at least every other day and sometimes every day. The move is aimed at controlling volatility, so if the markets go up or down more than 5 percent, trading is automatically suspended.

It's  no secret that Russia has suffered enormous losses as a result of this financial crisis. It’s a commodities-based economy and so as the price of commodities, particularly oil, has continued to plummet, Russia has felt the pain. What’s interesting about the effects of the crisis here though is not how much it’s being felt, but who it’s being felt by.

Unlike in Europe or the United States, most middle class Russians do not invest in the stock market, so it’s really the financial elite that has been hit hardest. A recent Bloomberg article wrote that Russia’s Top 25 richest men have lost more than $230 billion in the last six months -- that’s almost $10 billion each.

No one in Russia is about to start crying for Russia’s uberwealthy oligarchs as they weather the storm of this meltdown. If anything many Russians are probably holding back a smile as they read that the richest man in the country is being forced to sell off some of his assets.

But beyond the schadenfreude Russians are also fearful. Analysts here expect a mass of job cuts in early 2009 as banks and construction companies are forced to downsize.

This also isn’t the first time Russians have gone through a meltdown and so they know just how badly it hurts. Many people I have spoken to have already taken their money out of Russian banks and others are ready to do so at a moment’s notice. As the old Russian saying goes, “Once burned by milk, you will blow on cold water.”

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October 15, 2008 in Clarissa Ward | Permalink | User Comments (6)

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Posted by: samhiguchi | Oct 15, 2008 9:18:04 AM

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