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. Last Updated: 07/27/2016

Shares Continue to Slide, Foreign Investors Guarded

Russian share prices continued to slide downward this week as foreign investors stayed out of the market, cautious over the war in Chechnya and tough negotiations for a $6.4 billion loan from the International Monetary Fund, analysts said Friday.


The dollar-adjusted Moscow Times Index slipped 3.2 points to close the week at 84.94, while the ruble-based MT Index gained 1.14 points to close at 152.14.


Decliners outpaced advancing issues by 11 to 9 in the ruble-based prices of the 30 companies listed in the MT Index, with 10 issues unchanged.


Oil, energy and telecommunications stocks dropped sharply, while several brokerages stopped listing buy quotations altogether Thursday, said Vitaly Dmitriyev, an expert with the Skate Press Consulting Agency.


Average prices for Yuganskneftegaz shares dove to 53,600 rubles ($13.5) from 64,200 rubles last week, while LUKoil division Kogalymneftegaz shed 9,800 rubles to close at 108,550. Komineft dropped 1,800 rubles to 21,700.


Shares in utility United Energy Systems dropped 3,350 rubles to 47,400 in the wake of the company's cash auction Dec. 17, where the government sold a 0.023 percent stake


The only bright spot was stock in timber companies, which posted gains as investors sought out new sectors, said Alexander Lobanov, securities specialist at the Rinaco-Plus brokerage.


Average prices for shares in the Syktyvkar Timber Factory rose to $19 from $16, and the Bratsk Timber Factory stock rose from $12 to $13, he said.


Sergei Glushchenko, a trader with the Grant Financial Center, attributed the overall decline to foreign investors' worries over Chechnya and the $6.4 billion IMF loan, which Russia desperately needs to finance its 1995 budget deficit.


"The way the Chechen card is being played testifies to the instability of the government, and this scares foreign clients off," he said. Western investors account for the majority of trade in Russian shares.


An IMF delegation and Russian government officials began talks on the standby loan Wednesday, and negotiations are expected to be tough.


Economists predict runaway inflation and a serious run on the ruble if the aid is not forthcoming.


Glushchenko said President Boris Yeltsin's condemnation of new privatization chief Vladimir Polevanov for his antireform statements was a good sign, but far from enough to bring investors back to the market.