Russia Stock Market Fall Is Said to Imperil Oil Boom.

One fallout of Russia's decision to respond disproportionately to Georgia's provocations in the Caucasus is the collapse of its stock market, in large part a response on the part of investors who now perceive a greater risk (higher risk premium), combined with the fact that the economy there is driven predominantly by commodity export (read: they export lots of fossil fuels), and commodity prices of been cliff-diving: Today crude dropped to $95... Earlier this summer, oil was close to $150 per barrel.

Russia Stock Market Fall Is Said to Imperil Oil Boom

MOSCOW — Rattled by falling oil prices and the war in Georgia, Russia’s stock market has slumped so severely that it now threatens the country’s oil-fueled boom of recent years, economists say.

The benchmark RTS index has lost 46 percent of its value since its peak in May, representing a paper loss of about $700 billion for Russian companies. Much of that decline has come since the war in Georgia and the subsequent war of words with the United States and Europe that unsettled foreign investors, who began withdrawing capital.

The question, of course, is which is more important in the Russian market's slide? Is it politics driving the price of stocks down, or the decline in oil prices? The Times correspondent does a little research and finds...

In one indication that Russian politics lubricated the market slide here, however, investors have pulled nearly $5 billion this year from emerging market funds with a heavy Russia weighting, according to EPFR Global, a company that tracks fund flows. By comparison, investments in Middle East and African funds, which are also seen as dependent on commodity prices, have risen this year.

If that's the case, why the misleading headline? Shouldn't it read: "...Is Said to Imperil Free-Market Boom"?