not really dead. It's probably just a big investment house buying back into Russian stocks.
Yes, it's that same rumor that regularly sends tremors through the Russian equity market -- the one about sickly Russian President Boris Yeltsin dying -- trickled out of London yesterday for the umpteenth time since the fall of Communism, according to brokers and investment strategists.
It's happened so often that traders in Russian issues have come up with a mantra to reassure their clients: "Yeltsin dies every Friday, and comes back to life every Monday morning."
Yesterday, however, whispers of
The Yeltsin Death Rumor
may have meant something else: shorts desperately scrambling to cover their positions. According to traders, an 800-pound market gorilla firm was trying to push the market down, and started talking up the rumor to bring prices down a few ticks before the firm launched a massive buying program yesterday.
Dirty pool? Maybe. But that's how small and provincial, and easily influenced, the Russian market really is. Were it the U.S. Treasury market, it would take more than a few credible sources to get prices moving on a rumor that, say,
was resigning. Just kidding.
But Russia is easily manipulated. "Look, this is a small, illiquid enough market in which even a single trader can move prices. Maybe even, say, to get back at a rival trader at another firm, take the icing off his cake a little bit," said one London-based investment strategist who asked not to be identified.
And it is common investor knowledge that Yeltsin is aged and sick, even when he's not drinking. "He's an absentee president most of the time," says Matt Lugar, head of
in New York. "So people can get away with things they can't get away with in other markets."
Or here's the likely scenario: A sales guy with a big Western firm knows he could earn himself a few hundred thousand bucks -- err, make that pounds, since this started out of London, no? -- by pushing down prices. If only he can start The Yeltsin Death Rumor just before his firm's about to hit the "buy" button on Russian stocks. He turns to his buddy on the desk: "Pssst! Hey! Didja hear? Yeltsin hasn't been seen in public in a few days. Canceled his trip to
. Heard he's bought it." And we're off.
Sounds like a nice, safe place to own stocks?
That's not to say there aren't fundamental problems that would punch the market lower on its own. Just yesterday, the Russian government threatened to seize assets from the country's blue-chip gas behemoth
for unpaid back taxes. And Stanley Fischer, deputy managing director of the
International Monetary Fund
a $10 billion to $15 billion bailout deal will take "a week or two weeks" to hammer out.
Because Russia is fundamentally, systemically in dire straits, that makes the stock market even more vulnerable to The Yeltsin Death Rumor. That it circulated once again illustrates exactly how desperate Western investors are for the Russian market to hit rock bottom, to speed up the painful process, so they can -- dare we utter the words -- start buying Russian equities again.
Because Russia is in such big trouble, that's why the Kremlin had to issue a statement yesterday to news agencies saying Yeltsin was working in his residence in the suburbs west of Moscow, that he had traveled to the countryside two weeks ago and his last television appearance was Wednesday. Because he's not really dead.