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. Last Updated: 07/27/2016

Bank Crisis Sparks Stock Market Action

The liquidity crisis gripping commercial banks spilled over into the stock market this week, with shares registering small gains amid uncertainty over the situation in the currency sector.


The Moscow Times Index crept up more than 4 points over the week to close at 147.4, up from 143.66 last Friday. The dollar-adjusted index rose to 73.32 from 71.83 a week ago.


Thirty issues rose and 17 declined, with three remaining unchanged among the 50 shares listed in the index.


It was the first gain in the index since July 6, when it closed at 196.13. Since then shares have fallen steadily although summer trading has been light.


At the very least, the banking crisis injected some action into a market that has been lackluster and trickling downward for weeks.


"It has had some bad impact during these two days," Igor Lossavio, a manager at Olma Brokerage House, said of the liquidity crisis. "Of course, those kinds of things do not contribute to market stability. Investors start to be more cautious."


Banks needing capital started to sell their positions, driving some prices down, said Alexander Lobanov, a trader at Rinaco-Plus brokerage.


Some issues, however, benefitted from a so-called "flight to quality." Blue-chips Rostelecom and Yukanskneftegaz posted gains Friday, said Anton Lobanov, an analyst at Skate-Press consulting agency. "People take them for reliable stocks, to be on the safe side."


Over the week, Rostelecom gained 6.25 percent to close Friday at 20,890 rubles, while Yukanskneftegaz recouped earlier losses to close at 47,760 rubles, down 2.39 percent.


Bratsk Timber rose 9.21 percent on the week to 190,150 rubles. Unified Energy Systems jumped 10.64 percent to close Friday at 42,670 rubles.


The week's biggest losers were Perm Motors, slipping 17 percent to 2,100 rubles; Condpetroleum, down 9.5 percent to 8,180 rubles; and Olbi-Diplomat, which lost 8.5 percent to 13,500 rubles.


Trading picked up Friday after summer sluggishness in the early part of the week and confusion Thursday, dealers said, but the market is still assessing the banking crisis and is relatively quiet.


"If everyone decides to wait and see, then there are no buyers," said Bernard Sucher, managing director of Troika-Dialog brokerage. "There may be no sellers ... but prices would go down."


Vasily Sidorov, managing director of Columbus Investments, said brokerages owned or operated by banks were particularly vulnerable to the upheaval and had frozen many activities.


"Several of our trading partners from London and New York have told us that some of their actions are put on hold until the whole situation is worked out," Sidorov added.


But presuming the credit crunch does not turn into a full-blown banking crash, brokers did not expect the stock market to suffer unduly from the events Thursday and Friday.


"We shouldn't be expecting that drastic of a fallout from this crisis," Sidorov said.