Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Oil Sell-Off Doubles Price of Voucher

The price of Russia's privatization voucher has nearly doubled in the past two days in a buying spree which traders say has been triggered by the first big auction for shares in Russia's oil industry.


The price of the security rose to almost 27, 000 rubles ($22. 10) on trading floors around Russia on Thursday, up from around 14, 000 rubles at the start of the week.


Deputy Prime Minister Anatoly Chubais, Russia's privatization boss, said Thursday that the sharp rise in the value of the voucher, which was worth only 7, 000 rubles as recently as four months ago, showed that the political challenge to privatization was now over. "Nothing and no one can reverse it", he said.


The voucher-buying frenzy spread among traders over the course of Thursday's trading. At the Central Russian Universal Exchange, which trades in the morning, the average voucher price jumped to 24, 109 rubles, from 15, 918 on Wednesday.


At the Russian Raw Materials and Commodities Exchange, Moscow's other big trading floor, the average voucher price reached 26, 890, up from 14, 850 previously.


Ilya Rybin, head of the stocks department of the Central Russian Universal Exchange, said that the immediate cause of the rise was the auction now under way for 12. 5 percent of shares in Yuganskneftegaz, one of Russia's biggest oil companies with assets of at least $600 million.


"Dealers got orders to buy vouchers in any amount and at any price", he said.


He said that buyers of vouchers included other rich firms in Russia's oil and gas complex, as well as foreign companies bidding through local intermediaries.


The voucher issued to every Russian citizen starting October last year is the main way of paying for shares in the thousands of state-owned firms which the government is selling under its privatization program.


Shares in over 7, 000 large-sized firms have already been sold to the public through special voucher auctions. The companies currently up for auction cover every Russian industry, and region, including a tire factory in Siberia, a power station in Central Russia, the Vostok Hotel in Moscow and a synthetic leather plant in St. Petersburg.


The voucher first traded at around 5, 000 rubles last year and remained below 10, 000 rubles until September this year because of fears that the now-dissolved parliament would stop the privatization program.


Chubais said that the voucher had risen consistently over the past three months and he expected it to rise further. "The events of the last two days show that the growth in the voucher price can still go further", he said.


Vladimir Pankov, chief expert for the Russian Raw Materials and Commodities Exchange also said that he did not expect any fall in the voucher price.


"People tried to buy vouchers as cheaply as possible to sell them at a better profit tomorrow", he said.


Artur Motylev, head of broker operations for the First Voucher Investment Fund, one of the biggest investors in privatization, said he also expected further rises because profitable oil companies and hotels would soon be put up for auction.


"Only about 10 percent of all oil and gas industry shares have been sold so far. We are getting huge orders for vouchers", he said.


He said that only about 15-20 percent of vouchers now remain in the hands of the public.


The government estimates that another 40-50 percent of the 150 million vouchers have already been used to buy shares. The remainder are still in the hands of large institutional investors, including mutual funds like First Voucher Fund, which swap vouchers for shares.