Bloomberg reports that a few whispers from the United States can bring the Russian stock market to its knees. La Russophobe dares to wonder what the Russian market would do if America decided to start shouting ...

June 13 (Bloomberg) -- Emerging-market stocks dropped to a six-month low after a seventh Federal Reserve official in as many days hinted U.S. interest rates will rise, prompting investors to dump riskier assets. Shares in Russia and Poland led the slide. The Morgan Stanley Capital International Emerging Markets Index, a measure of stocks in 25 developing countries, fell 4.1 percent to 666.65 as of 1:15 p.m. in London, poised for the lowest close since Nov. 29. The measure has plunged 24 percent since peaking on May 8. The dollar-denominated Russian Trading System Index lost 7.1 percent, and Poland's WIG20 Index slumped 6.8 percent. Turkey's ISE National 100 Index tumbled 6.5 percent, while India's Sensitive Index was Asia's biggest loser, slumping 4.4 percent. "Everyone is spooked by rate increases in the U.S.,'' said Nitin Jain, who helps manage about $563 million at Kotak Mahindra Asset Management Co. in Mumbai. "We will see tightening credit on the back of such rate increases.'' Central banks around the world, including those in the euro region, India, South Africa and South Korea, have increased interest rates this month to quell inflation, feeding concerns that global economic growth will slow. Fed officials in the past week have also signaled they may be forced to boost borrowing costs further, after 16 increases since June 2004. Fed Bank of Cleveland President Sandra Pianalto said yesterday inflation exceeds her "comfort level,'' echoing remarks by Fed Chairman Ben S. Bernanke last week, who said recent increases in inflation measures "are unwelcome.''

In an interview late Monday, Browder said the pullout was partly due to his troubles with Russian authorities.

Hermitage is the largest portfolio investor in the Russian stock market.

The pullouts, or redemptions, took place over the last three months and make up 11 percent of the fund's total portfolio, Browder said.

Browder, who has gained a reputation as a crusader for shareholder rights in Russia, has been barred from entering the country since last November, when an order was issued branding him a threat to national security.

Browder has recently battled with state-controlled Gazprom over corporate-governance abuses and inefficiency. He also attacked Kremlin-connected oil major Surgutneftegaz over its murky ownership schemes.

Browder's comments Monday came in response to figures in a weekly report by a fund that tracks money movements in emerging markets.

The fund, Emerging Portfolio.com Fund Research, reported that Hermitage had lost $529 million in the past week -- nearly one-third of the total losses racked up by emerging markets over the seven-day period. It was one of the worst weeks since the 1998 Asian crisis.

The fund found that $1.3 billion had been lost from emerging markets across the globe last week. Of that, $545 million came from Russia.

The report sparked speculation among investors that a major force behind the losses was investors seeking to exit Browder's fund because of the Kremlin's decision to bar him.

The Kremlin has declined to comment on the affair.

When reached for comment about the independent report, Browder, who is now running the fund from London, said that while the $529 million figure was more or less correct, the redemptions had been made over the last three months and not in the space of a week.

He said the redemptions were recorded last week because that was when the funds were returned to investors.

"Most of this was sold more than two months ago," he said.

He added: "About half of it had to do with my visa, and about half of it had to do with profit-taking."

No one could be reached for comment late Monday at Emerging Portfolio.com Fund Research.

When news broke in late March that Browder had been barred, Hermitage had $2.9 billion under management and $1.9 billion in other accounts, according to fund data made available to The Moscow Times. That included the Russian portion of an HSBC BRIC fund.

As of June, Hermitage had $2.4 billion under management as well as $1.7 billion under separate management, according to the company data.

British officials, from the Foreign Office to the London Stock Exchange, have criticized Russian authorities for arbitrarily barring Browder from the country, saying it could dissuade further investment in the country.

Browder said he was still optimistic that his visa problems would be resolved. Despite acknowledging that his conflict with Russian authorities had prompted investors to pull out of the country, Browder insisted they remained confident in Hermitage.

"I'm still growing along with the Russian market," Browder said.

La Russophobe notes that it could be that some of Browder's "optimism" stems from the fact that his father was Earl Browder, an ardent communist and general secretary of the Communist Party in America during the Stalin years.