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Russia bears on Wall St.
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September 23, 1996: 6:57 p.m. ET
U.S. investors worry about effects of possible post-Yeltsin government
From Correspondent Katharine Barrett
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NEW YORK (CNNfn) - Investors in Russia were relieved when President Boris Yeltsin survived the mid-summer election. But anxiety has returned as his own doctors are expressing public pessimism about his health.
Russian shares tumbled more than four percent Monday on the latest worries about Yeltsin's health.
His surgeon over the weekend said the president's scheduled heart bypass surgery may have to be postponed or canceled altogether if Yeltsin remains too weak.
U.S. heart surgeon Michael DeBakey arrived in Moscow on Monday to evaluate whether Yeltsin is fit enough for the operation.
Opponents, such as Communist Party chief Gennady Zyuganov, are calling for Yeltsin's resignation, and the ensuing political uncertainty has investors once again unsettled that Yeltsin may not complete his term in office.
Dan McGovern, Russia analyst for Merrill Lynch, thinks that although the turmoil does impact financial markets, especially the Russian treasury market, "by year's end, these questions will be resolved and interest rates will come down."
Russian treasury bills dropped as much as five percent Monday, and even some United States bond traders blamed bearishness on Russia for the market's morning stumble.
One Moscow investment bank urged clients to prepare for a post-Yeltsin era.
If he were to resign or die, Prime Minister Victor Chernomyrdin would take over. Then, in 90 days, another national election must be held.
However, western observers like Erik Nielsen of Emerging Debt Markets are confident economic reform in Russia is more robust than any one leader. (192K WAV) or (192K AIFF)
As with any emerging market, investing in Russia has always required a strong stomach. The United States is still Russia's largest outside investor, with U.S. firms accounting for more than $2 billion of direct investment.
The good and bad news is that what has kept that number from growing faster are problems with the tax and legal structure, not leadership struggles.
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