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. Last Updated: 07/27/2016

Fund News Not Enough to Lift Market

Russian equity and currency markets were down over the week despite a stock and debt price upswing on news of a $10 billion loan from the International Monetary Fund, traders said Friday.


Stocks fell until Wednesday, then reversed direction on expectations that the IMF loan deal would be approved, traders said. Michel Camdessus, IMF managing director, gave the green light to the loan Thursday afternoon.


"As soon as rumors of approval of the loan started appearing ... people got frightened and started buying and buying, hoping that Western investors would buy after approval of the loan," said Alexander Lobanov, a trader at Rinaco-Plus.


Brokers were still buying Thursday and Friday, but the market was down overall on the week before. The Moscow Times Index of 50 leading stocks lost more than 3 percent to close at 126.41 on Friday, while the dollar-based index fell nearly 4 percent and settled at 58.19.


The loan helped smooth political jitters, one trader said, but only for the immediate future.


"For the near term it has reduced the level of uncertainty relative to Russia," said Yury Lopatinsky, head trader at Grant. "That could all disappear June 16," he said, referring to the date of the presidential election.


Decliners outpaced advancers on the MT index 35 to 7, with the remaining stocks unchanged.


The week's winners included the Leningrad region oil refinery Kirishinefteorgsintez, which gained 5 percent to $1.95; Krasny Oktyabr chocolate factory, up 4 percent to $6.15; and Syktyvkar Timber Complex, which increased by 3 percent to $62.


Oil companies were big losers. Komineft lost 15 percent to settle at $1.40; Purneftegaz was down 15 percent to $1.33; and Sakhalinmorneftegaz lost 12 percent to 93 cents.


On the currency market, the ruble dropped 28 points against the dollar over the week, closing at 4,788 on Friday from 4,760 last week, a loss of nearly 6 percent.


That drop was in line with the Russian unit's recent performance, said Igor Doronin, a currency analyst at the Moscow Interbank Currency Exchange, where trading takes place. He said the week before the ruble fell by about 4 percent in nominal terms.


Doronin attributed the decline to a strong demand for dollars, particularly as overnight interbank interest rates dropped during the week, making the dollar an attractive alternative investment.


Russian MinFin bonds and Vneshekonombank loan prices were up slightly Friday after moving within one point for most of the week.