Russian government to buy stocks to ease credit crunch

October 30th, 2008 - 5:59 pm ICT by IANS  

Astana (Russia), Oct 30 (RIA Novosti) Russia’s state-controlled bank Vnesheconombank (VEB) will invest up to five billion rubles ($184.5 million) daily to buy stocks in the Russian bourses to ease the effects of the ongoing global financial crisis, its chief Vladimir Dmitriyev said Thursday. The global credit crunch, sparked by the subprime mortgage crisis in the US, quickly spread to Asia and Europe leading to record losses on global financial markets and a worldwide liquidity shortage.

The Russian government has allocated 175 billion rubles ($6.5 billion) from the National Prosperity Fund to national development bank VEB to buy the stocks of leading Russian companies with strong credit ratings to shore up the liquidity of domestic businesses.

“We have spent around 20 billion rubles [$740 million] on shares and around five billion rubles [$185 million] on bonds of highly reliable Russian issuers. Our plans are about the same - to use resources from the National Prosperity Fund to diversify it and support the Russian financial market. The volume of investment will depend on the behavior of our bourses and share prices,” Dmitriyev said.

VEB managers say they coordinate stock market investment with the finance ministry in terms of the expediency of the operations, their volume, and the list of eligible companies and investment instruments.

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