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. Last Updated: 07/27/2016

Traders Hoping for Post-Poll Bonanza

Russian stocks headed into Wednesday's vote higher, but traders were nervous ahead of the poll that many expect to open the floodgates for massive amounts of equity investment.


Financial markets were closed Wednesday for the election day holiday. On Tuesday the Moscow Times index of 50 leading issues closed up 5.1 percent to 329.99 in ruble terms, with dollar-adjusted prices rising 4.9 percent to 142.08.


The Russian equity and debt markets have churned recently over concern about President Boris Yeltsin's health, although a television appearance by the incumbent Monday and firm denial of serious illness by the Kremlin helped stabilize prices somewhat.


"It's a very tricky time in the marketplace," said one trader, who asked not to be identified. "There's a lot of money waiting to be invested and the timing of it will be Yeltsin's re-election.


Some Western investors were said to be trimming their holdings and taking profits a day ahead of the closely watched vote, and what buying there was seemed focused on second-tier stocks, traders said.


"Investors, particularly foreign clients, are taking opposite positions," said Viktor Kats, a technical analyst with Gambit Securities. "While some were active in particular stocks or were holding on to positions, others won't buy anything until the results of the elections."


Bond prices also rose, continuing a trend that has seen yields on government securities plunge from over 200 percent last month to 91.95 percent on the secondary market Tuesday.


Most market players predicted stock prices would skyrocket Thursday, as traders execute longstanding orders to invest as much and as quickly as possible in the case of a Yeltsin victory July 3.


Others forecast a slight drop in the market, with the idea that sophisticated investors have already fully discounted a Yeltsin victory and big U.S. investors won't return to trade in big volumes until after the July 4 national holiday.


"Much of the buying [on Thursday] could be speculative, because it could take a few days for the big Western accounts to get in," said Yury Lopatinksy, director of sales and trading at Creditanstalt Grant.


Some top companies made gains Tuesday, but few have been able to recover the record highs of last week's pre-election rally. Among blue-chip shares, Surgutneftegaz rose 7.3 percent to $0.515, LUKoil gained 10.4 percent to $11.15, while Rostelecom slipped 1.89 percent to $2.60.