The Moscow Times reports:

Russian stocks suffered a battering across the board last week, challenging the perception that the country is a safe haven from the storm in the United States. "Many commentators and market participants thought the crisis would not have an impact in Russia at all," Eugene Belin, head of fixed income, currencies and commodities at Citibank Russia, said last week. "People called Russia a safe haven. "These predictions proved false as the crisis developed. Russia is today far more connected to the world economy than it was before."

If ever evidence of that was needed, one needs merely cast a glance over some of the figures released by the State Statistics Service last week. Foreign direct investment fell by 0.4 percent in the third quarter compared with the same period last year, a massive drop on first-quarter and second-quarter FDI year-on-year growth of 154 percent and 134 percent, respectively. Yet more bad news, combined with fears of a U.S. recession, pushed stocks lower. Even with an 11th-hour recovery Friday across the board, the MICEX shed 2.19 percent this week, to finish at 1793.03 points, while the RTS dropped 1.34 percent to 2159.89 points. Telecoms and energy stocks both suffered knocks last week. Arguably more surprising, banking stocks were down on the back of global sentiment, despite having virtually no exposure to subprime paper.

VTB, which has disappointed investors and analysts for several months now, continues to flounder. So much so that a group of minority shareholders, many of them individual Russian investors who bought into the bank during its much-hailed "people's IPO" in May, sent a letter to Prime Minister Viktor Zubkov last week, asking the state to buy back their shares at the IPO price of 13.6 kopeks each. The stock has fallen by more than 20 percent since then. Sberbank, which over the long term has performed remarkably well, was facing losses over the week, a reflection of the short-term drag on stocks. Eric Kraus, managing director of the Nikitsky Fund, said the past week's drop was just a question of sentiment. "The short-term market has as much to do with Russian fundamentals as it has to do with the weather on Jupiter," Kraus said. "Russia is trading entirely in line with global liquidity flows." [LR: In other words, you self-serving idiot, Russia is not a safe haven but totally submissive to the world economy]

But by Friday, things were not looking quite so dismal. In spite of falling base metal prices, Norilsk Nickel led a recovery after speculation that Oleg Deripaska's RusAl was waiting to pounce on Mikhail Prokhorov's blocking stake, should Vladimir Potanin fail to agree on terms to buy it. RusAl and Prokhorov's Oxenim confirmed late Friday that a conditional deal had been struck. If Potanin were to fail to come up with the money, Deripaska would get the blocking stake, while Prokhorov would get 11 percent of RusAl. Andrei Kuznetsov, strategist at Troika Dialog, said Russia would continue to be a safe haven for investors. Global negatives bear little relation to Russia, he said, which continues to display macroeconomic stability.