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. Last Updated: 07/27/2016

No-Show No Problem For Resurgent Markets

Russian stocks and government bonds rose Monday, shrugging off President Boris Yeltsin's decision to postpone a meeting with U.S. Vice President Al Gore and cheered by the appointment of reform champion Anatoly Chubais as the president's chief of staff.


Yeltsin's abrupt cancellation of a meeting with Gore -- rescheduled for Tuesday -- raised fresh concerns over the Kremlin leader's health and sent early shivers throughout most of the world's leading financial markets.


But Russian markets, traditionally slow to react to political events, showed no impact, and most leading shares rose.


The Moscow Times Index of 50 stocks recouped some of last week's losses, closing up 8.86 in dollar terms to settle at 122.56.


"People are aware that Yeltsin is very tired, that he is a bit run-down after a very strenuous election campaign, and it is something that one can be obsessive about," said Martin Diggle of Brunswick Brokerage.


The Russian president's spokesman told a Kremlin briefing that Yeltsin, who suffered two mild heart attacks last year, was "really very tired" but not ill.


Anton Kudryashov, chief equities trader at Renaissance Capital, said prices had risen about 5 percent. "Volumes are low to moderate, and European clients are mostly passive."


Russian stocks soared in the run-up to the second round of the presidential election July 3, in which Yeltsin defeated communist Gennady Zyuganov, but they have since lost almost a third of the gains as an inflow of Western money has not materialized.


Russian treasury bill, or GKO, prices rose, and Ministry of Finance bonds, or MinFins, were little changed in thin trading, unaffected by concerns over Yeltsin's health.


"There was no reaction on the GKO or MinFin market," said Andrei Yashchenko, fixed income analyst at United City Bank.


"Russian traders do not normally react to this news, and for foreign investors, there are more important issues such as the future government and declarations of its future steps."


The appointment of Chubais -- who masterminded Russia's privatization efforts and financial stabilization policy before being forced out of the government in January -- was likely to be a boon to the markets.


Yashchenko said prices had been helped by Prime Minister Viktor Chernomyrdin's order to the Finance Ministry to reduce domestic borrowing to cut yields in line with inflation. The market in dollar-denominated MinFins was thin, but Yashchenko said it could rise once the makeup of Chernomyrdin's new government was known and payment on $30 million of stolen MinFin bonds, frozen last month, was freed.


The ruble edged downward with the possibility of a banking crisis, rather than Yeltsin's health, causing dealers concern. Rubles for today's settlement were quoted at 5,132 to 5,135 per dollar, compared with 5,106 to 5,108 late Friday. (Reuters, MT)