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. Last Updated: 07/27/2016

Privatization Vouchers Bounce Back Yet Again

Despite gloomy expectations, the market rate of the privatization check recovered on Wednesday after falling for days. At the Russian Raw Materials and Commodities Exchange, the vouchers closed at 6, 900 rubles, after panicked brokers had driven the price down to 6, 270 rubles on Tuesday.


Leonid Griaznov, president of the Intrust brokerage company, said he had expected a drop, as had other brokers questioned earlier in the day. But demand rose unexpectedly. Moreover, while sellers reacted to Tuesday's panic by refusing to drop their prices any further, Griaznov said.


The rise in demand can be explained by the recent appearance of representatives from soon-to-be-privatized state firms, which have started buying large numbers of vouchers at the exchange and at various banks.


Anxious to keep control of their enterprises, directors have siphoned off money into daughter companies which now buy up vouchers. With these vouchers, directors hope to buy a controlling share of their companies once they go up for sale, Griaznov said.


Konstantin Vasilichishin, who heads the Information and Analysis Center of the exchange, traced the ups and downs of the voucher rate in the past two weeks directly to the events at the Congress of People's Deputies.


When the Congress opened on Dec. 1, the traders "believed in the common sense of the Congress", Vasilichishin said, inferring that they expected acting prime minister Gaidar to keep his job. As a result, the voucher rate shot up to 8, 700 rubles on Dec. 4.


It dropped as soon as Gaidar's reforms were attacked in conference, however, and then bounced up and down as the battle in Congress waged along.


Gaidar's defeat on Dec. 9 set off a slide in the voucher rate that turned into a free fall on Tuesday.


That politics can have such an immediate effect on the voucher sales can be explained by looking at who buys and sells the vouchers, Vasilichishin said.


Although major dealers are active in the voucher business, buying and selling hundreds of vouchers at a time, small-time merchants make most of the deals.