Russia's Micex Volume Tumbles as 23 Halts Send Trade to London

By William Mauldin

Oct. 31 (Bloomberg) -- The value of shares traded on the Micex Stock Exchange, Moscow's biggest by volume, fell by two- thirds after stock prices slumped and investors turned to London to trade Russian equities as the bourse halted trading 23 times.

The October trading volume of 1.35 trillion rubles ($50 billion) is a third the total of 3.91 trillion rubles for May, according to data e-mailed from the exchange. The October total doesn't include trading today or yesterday.

Rules set by Russia's Federal Financial Markets Service forced the Micex to suspend trading 23 times since early September, according to a tally by Bloomberg News. The trading suspensions, designed to put a brake on the magnitude of fluctuations, ranged from one hour to more than a day. The 30- stock Micex Index has fallen 63 percent to 708.49 since May 19 as of 2:24 p.m. in Moscow.

``Very few who have a choice are trading on the Micex,'' said James Fenkner, managing partner at Red Star Asset Management in Moscow. ``Russian regulators shot the market in the foot, and what remains has hobbled off to London.''

BNP Paribas SA estimates $140 billion in Capital has left Russia since the beginning of August amid a war with Georgia, a decline in oil prices and the rout in the country's stock market.

`Better Job'

The average trading volume of American depositary receipts of OAO Lukoil, Russia's second-biggest oil producer, rose 21 percent to 6.4 million ADRs a day in October compared with May as the average number of Lukoil shares traded on the Micex each day fell 66 percent to 1.7 million during that period, according to data compiled by Bloomberg.

``It's better to trade the London depositary receipts, since the British have done a better job at keeping their markets open,'' Fenkner said.

A computer breakdown closed trading on the London Stock Exchange Sept. 8. Trading in Lukoil ADRS and equities of other Russian companies listed on the LSE has been unaffected by the Micex suspensions.

The average daily volume on the RTS exchange, Russia's second-biggest, tumbled to $10.6 million in October from $62.6 million in May, according to data compiled by Bloomberg.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.