The thoughts that are gathered in this article have been formed in the past January. I had begun reading the newspaper Vedomosti (russian for “Informations, News”) in a search for some kind of paradox in the management of a centralized economy. And therefore what the consequences were when it came to the MOEX, the Moscow Stock Exchange.
I am a believer that the BRICS circuit, a kind of a circuit which allows some sort of “insider trading” when it comes to the allied countries, brings to possibility a wide range of complex strategies. But nonetheless, these countries are radically different from one another. And, as it seems, there are class A and class B countries. It’s a system which allows countries like Brazil and South Africa to grow, but only through monetary policies which are set by Beijing. In fact, it turns out that most of the time, when the Chinese Central Bank sets the currency for an augmented export rate, all other BRICS currencies devalue in the same time frame.
There also is such an agreement that facilitates the exchange between BRICS Stock Exchanges (BRICS Exchange Alliance) making it certainly easier for insider information trading.
But coming back from the grand scheme of things, the two largest economies in the BRICS dimension, the chinese and the russian one, are tremendously different. Different investments, different stock market, different population, different consumer spending. And, as it seems, there is also a different sense of capitalism.
The part that caught my attention about the MOEX, is that it is not entirely centralized. There are mainly two free dynamics, which I may call a weak dynamic and a strong dynamic.
The strong dynamic consists of the macroeconomic laws, and by that I mean the laws that move the stock prices before the centralized strategy does. The weak dynamic is the small independence that funds and companies have.
Companies and funds can, of course, be centralized, but not in an absolute perfect way.
There are in fact two imperfections. One is on the timing of the centralized strategy and the other is on the beneficiaries of the centralized strategy.
A centralized strategy is such that the scheduled reassessments cannot be perfectly timed with the global geoeconomic tendencies. Which means that only free investment can create true value and advantage.
Which also means that an inappropriate strategy in T1, T2, T3 (already out of date when it comes to being applied) cannot be of such a proportionate benefit for all actors, also resulting in disadvantageous costs for some short term investors.
Rispondi