Russian Minister of Finance Alexey Kudrin (left) and First Deputy Prime Minister Igor Shuvalov
Photo: Vasily Shaposhnikov
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Shuvalov Couldn’t Prop Up Market
First Deputy Prime Minister Igor Shuvalov’s assurances that Mechel is unlikely to suffer the same fate as YUKOS were insufficient to keep the Russian stock market aloft yesterday. “The most likely scenario is that the company will work with state organs,” explained Shuvalov. “We don’t want any stresses.” Analysts at JP Morgan lowered their rating of it from neutral to below market, expressing concern that authorities will use “nontraditional methods” to control inflation.
Despite a small jump, the market closed down. The RTS index lost 1.68 percent, falling to 1896.28 points, and the MICEX index lost 1.18 percent with 1439.01 points at closing. Mechel stock gained 26.5 percent on the RTS classical market, but closed up just 10 percent. Mechel depository notes continued their skid on the NYSE, losing 4.6 percent.
Blue chips lost between 0.7 and 7.4 percent on the MICEX yesterday. According to Alfa Capital asset manager Andrey Kilin, Western investors are selling off their portfolios due to the perception that the political risks in Russia have just grown dramatically. Norilsk Nickel bucked the trend to rise 5.5 percent on the news of the possible appointment of Russian Federal Tourism Agency head Vladimir Strzhalkovsky to head that company. Rosneft was also up 2.5 percent, and Gazprom edged up 0.7 percent. One trader characterized the state companies as “the final refuge.”
Russian President Dmitry Medvedev is optimistic about the Russian stock market, nonetheless, calling it “one of the most attractive in the world” at a meeting with Sberbank head German Gref. Experts agree that, after several days of falling prices, it looks quite inexpensive.
www.kommersant.com
All the Article in Russian as of July 30, 2008
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