The RTS benchmark closed 123 points, or 6.4 percent down on the first trading day in Russia.
Photo: Grigoriy Sobchenko
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Russian Stock Market Shakes Off Oil Dependence
The Russian stock market went down to lows not seen since last summer. The RTS index closed 6.4 percent down on the first trading day, below the 1,800-point level in reaction to declining oil prices. Market watchers say, though, that consumer goods producers and banks will make up for the oil price slump.
The RTS benchmark closed 123 points, or 6.4 percent down on the first trading day, January 9. Despite vigorous attempts to push up the index, it failed to close above 1,800 points last week.
The rally came after oil prices dropped below the 18-month’s lowest price. Brent lost 16 percent over the past two weeks, down to $49.3 per barrel. Brent February futures slipped 13.6 percent to $52.2 per barrel. Oil prices are going down at the background of warm weather in the northern hemisphere with oil demand 24 percent below than usual in the United States’ north-west.
Other developing markets saw a major decline as well. Thailand’s stock index went down 6 percent, the Brazilian benchmark slipped 4 percent last week while the Venezuelan market lost 13 percent on January 9.
Russian market participants are not downbeat about the situation, though. “Nothing dramatic will happen until oil is at the present price level”, Kirill Tremasov from Bank Moskvy told Kommersant. Still, analysts anticipate more quotation fluctuations with high volatility due to the shaky situation on oil and gas markets and political risks connected with upcoming election campaigns in Russia.
Still, experts believe that the Russian market will keep advancing pushed up by the banking and consumer sector. Market analysts from leading investment companies and banks predict the RTS index to grow 20 percent this year to close at some 2,200 points.
www.kommersant.com
All the Article in Russian as of Jan. 15, 2007
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