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. Last Updated: 07/27/2016

Yeltsin, IFC, and Gazprom Don't Budge the Market

Sales volumes and prices on the Russian share market continued to stagnate this week despite commencement of the IFC Russia share index Monday and President Boris Yeltsin's reassertion of control Thursday.


"In the present situation any good news will only give a short rally, because the market is still waiting for the big foreign orders to come in," said Nick Mokhoff, head of equity sales at the brokerage Alliance-Menatep.


The Moscow Times Index settled Friday at 118.07 in dollar terms, virtually unchanged from the 118.37 close at the end of last week. The ruble index also barely budged, finishing at 288.91.


The doldrums were spread across the share market, where 13 issues advanced, 16 declined and 21 were unchanged.


Yeltsin's radio address and television appearance Thursday did not change investors' perceptions, because they are waiting for him to have his operation and hoping it is successful, said German Zvezdin, senior equities salesman with the investment company Troika-Dialog.


Likewise, the addition of Russia on Monday to the list of emerging markets tracked by the International Finance Corp., the private-sector arm of the World Bank, had little effect, as investors are largely waiting for its inclusion in the IFC's global index in January.


News of the government's reported tax ultimatum to Gazprom for almost $3 billion in back taxes did not badly wound the company's stock performance ahead of its ADR placement, due later this month. Volumes traded were around $1.5 million Thursday and Friday, and after sharp midweek swings the share price closed at $0.33, down 1.8 percent.


"Gazprom's ... share price is never really a function of its financials in any case," Zvezdin said.


State treasury bills spent the week recovering from the shock when the Russian Central Bank failed to support prices at the end of the third quarter.


"There's always a price dip at the end of quarters, because dealers need the money elsewhere, but this time it was accentuated by lack of support from the Central Bank," said Yury Zhuravel, fixed-income specialist with Most-Bank.


The fixed-income recovery was helped by two waves of foreign money, at the end of last week and at the Wednesday auctions.