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. Last Updated: 07/27/2016

Stocks Slip in Face of War, Anti-Reform Statements

A downward trend dominated a nearly idle Russian stock market this week as traders returned from holidays, and analysts were bearish over war in the breakaway republic of Chechnya and anti-reform comments from Russia's new privatization chief.


The ruble-based Moscow Times Index fell 2.07 points Friday to 151.00, although it gained 4.47 points since Dec. 23, when the market effectively closed down for the two-week Christmas and the New Year holiday period. The dollar-adjusted index, which eliminates the effect of the exchange rate on the ruble-based index, lost 4.77 points over the same period, slipping to 88.14 on Friday.


Dealers said that in dollar terms, there were only a few rising stocks in a sea of losses.


"I am only aware of a couple of stocks that edged up," said Olma brokerage house dealer Andrei Ippolitov, naming Chernogorneft and Sakhalinmorneftegaz as the advancers. "This is normal -- markets suffer in time of war."


First Deputy Prime Minister Anatoly Chubais said in Saturday's edition of Izvestia that foreign portfolio investment shrunk tenfold to between $30 million and $50 million a month in December, after reaching a peak of $500 million a month in the middle of 1994.


"One must say honestly that fighting in Chechnya has a very negative impact on the stock market and financial markets," Izvestia quoted Chubais as saying.


Although advancers led decliners in the ruble-based prices of the 30 companies listed in the MT Index, with 16 stocks rising, eight falling and six showing no change since Dec. 23, dealers said the widespread decline in the dollar prices was evident.


Aluminum and energy shares, previously among the most consistent advancers, took a downturn that analysts have attributed to remarks from new privatization chief Vladimir Polevanov, who has called for the nationalization of "unfairly" privatized firms in the metals, energy and defense sectors.


Bratsk Aluminum was quoted at the ruble equivalent of $22.90, down from $24 at the start of the week, Sayansky Aluminum drifted down to $22.88 from $22.98, Krasnoyarsk Aluminum hovered around $19 and LUKoil Holding dropped to $27.50 from $30.80.


Chernogorneft was the only clear winner, edging up slightly over the week from $65 to $65.25.


Ippolitov of Olma said foreign investors holding large baskets of stocks in aluminum and energy enterprises had withdrawn from trading, instructing their brokers to "watch and ask" instead of buying and selling. "Early in the week, several major players were even considering dropping their baskets of stocks," he said.