Head of Federal Financial Markets Service Oleg Vyugin doubts there are fundamental reasons for the market slump and accounts the decline for the flocking instinct of investors.
Photo: Alexander Miridonov
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Russian Officials Blame Investors for Market Slump
Top Russian officials commented the slump on the Russian stock market yesterday. Their explanations of the decline ranged from the insider trading to the flocking instinct of investors. Market analysts, however, paid little heed to the statements. They believe the Russian stock market is anything but stable, despite yesterday’s 10-percent rise of quotations.
High-ranking Russian officials commented the recent 25-percent 9-day-long slump of the Russian market yesterday. Andrey Kozlov, first deputy chairperson of the Central Bank, said that insider trading is to blame for the fall. Oleg Vyugin, head of the Federal Financial Markets Service, was more moderate. “There are no fundamental reasons for the decline but there is a kind of flocking instinct among institutional investors – first, it was a trend to buy, now we have a trend to sell.” The official said he has no facts to prove insider trading’s share in the slump. Russian Economic Development and Trade Minister German Gref was even more reserved and noted that the Russian market was affected by the overall correction on international markets, triggered by funds’ revaluation of their investments.
Quotations rose yesterday, making up for the slum. The RTS benchmark closed at 1407.49, up 6.75 percent, the MICEX index went up 10.7 percent and the Kommersant index grew 10 percent. What is more, nearly all blue chips added some 10 percent. Analysts maintain that the situation on world markets helped Russian investors to choose the direction. Brent crude rose 3.7 percent, to $68.3 yesterday. The decline on stock markets of developing countries also halted.
However, market watchers are not much upbeat about the new upward trend. “The Russian market will largely depend on the situation on world markets for the next weeks,” says Alexander Zhulyaev, head of the financial markets department at Investsberbank. “The market will obviously be volatile next month.”
www.kommersant.com
All the Article in Russian as of May 24, 2006
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