Regulator Lifts Its Ban on Short Selling

VedomostiDeveloper PIK's shares fell 7.9 percent in London on Thursday, while the RTS and MICEX both lost nearly 1 percent.
The Federal Service for Financial Markets said Thursday that it was lifting a temporary ban on short sales, unsecured transactions and margin trading.

The ruble-denominated MICEX Index fell 0.9 percent to 1,095.51, declining for the second time this week. The dollar-denominated RTS Index dropped 0.8 percent to 1,304.99.

From Friday, investors may make use of short selling and "one-for-one margin" trades, the regulator said in a statement. The move will "raise the level of liquidity" in the financial markets, it said.

In a short sale, investors sell borrowed shares, hoping to replace them in the future with cheaper shares, thus benefiting from a price decline.

In London trading, Moscow apartment builder PIK Group fell 72 cents, or 7.9 percent, to $8.45 in London trading, a record low. Alfa Bank said in an economic report Thursday that the construction industry "will be affected by the credit crunch."

LUKoil sank 67 rubles, or 4 percent, to 1,591.07 rubles, as crude oil retreated for a third day, slipping 91 cents, or 0.9 percent, to $104.82 per barrel in New York on concern that U.S. fuel consumption will drop further.

Polyus Gold advanced 49 rubles, or 9.4 percent, to 573.15 rubles, a third day of gains. Investors are buying on the "65 percent chance" that they will get a buyout offer at the shares' six-month average price, according to Alexander Zakharov, co-head of equities at Metropol. Russian billionaires Vladimir Potanin and Mikhail Prokhorov are nearing a deal that would give Prokhorov control of Russia's biggest gold mining company.

VTB Group fell 0.07 kopeks, or 1.4 percent, to 5.29 kopeks, its biggest decline in a week.