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Bulls Played on Putin’s Words
The decline of Russia’s stock market continued yesterday with benchmarks losing from 2 percent to 4 percent. RTS sank below 1,600 to close at 1,579.12 and MICEX shed to 1,292.92. The traders were more aggressive than on Monday but the turnover remained below average. The sales of the RTS classic market matched the Friday size of $33 million, and MICEX grew from Monday’s 37 billion ruble to 54 billion ruble.
The market was first pressurized yesterday by the drop of the U.S. indices, which losses reached 2 percent. The world followed the trend and Russia didn’t escape it. The country’s savings bank Sberbank shed nearly 7 percent. VTB that suffered the loss of 10.5 percent during the trading managed to close just at 1.5 percent down yesterday.
Regardless, the basic reason was the tension escalation in relations of Russia and the West in the wake of the statement of the RF President Dmitry Medvedev on recognizing the independence of Abkhazia and South Ossetia. The surge in sales initiated by nonresident investors lowered the indices by 2.5 percent during 10 trading minutes. But the bear campaign didn’t last long. The bulls stepped in to fuel quotes to levels above the previous close.
There are two basic reasons of adjustment. Investors had been anticipating the recognition since the meeting of Medvedev and leaders of two breakaway republics of Georgia, well-aware that the respective statement would be made sooner or later. Those selling in the previous days had been dealing for a fall. Once the statement was released, the investors set to buying the stocks.
Another scenario could be that the government joined trading to sustain the stock market, same as it did August 11, during the slump triggered by the operation of Russia’s troops in South Ossetia. And last but not least, the prices for crude oil resumed their global growth and this news is positive for Russia.
www.kommersant.com
All the Article in Russian as of Aug. 27, 2008
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