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. Last Updated: 07/27/2016

Reform Cabinet Picks Give Boost to Market

Russian stocks were solidly higher during the week, bolstered by President Boris Yeltsin's appointment of reform-oriented officials to key economic posts, though prices retreated somewhat Friday in profit taking.


The Moscow Times index of 50 leading stocks finished the week 5.96 percent higher, at 127.57, in dollar terms. It rose 6.58 percent, to 304.54, in ruble terms.


Brokers speculating on their own accounts and international fund managers fueled much of surge Thursday, said Andrei Kukk of the Rinaco Plus brokerage.


"Brokers have been heating the market through the week to have a good sale," he said.


Investors were generally encouraged by the naming Thursday of top banker Vladimir Potanin as first deputy prime minister in charge of economics, and former Yeltsin economics adviser Alexander Livshits as finance minister. Both are viewed as reform oriented.


Trading was heavy in Norilsk Nickel, which was up 18.68 percent for the week, to $7.75, though it slipped back Friday from Thursday's high of $8.25.


Yeltsin signed a decree Monday granting the giant Nickel producer major tax breaks and other benefits to help it clear debts and restructure.


The stock also was helped by the cabinet appointment of Potanin, president of Uneximbank, which owns a controlling stake in Norilsk.


"The market entered a digestion period," said Anton Kudryashov, head of equities trading with Renaissance Capital.


Dmitry Bedenov, an analyst at the Russian Brokerage House, said trading volumes were markedly up this week, at $12 million to $14 million daily, from $5 million to $6 million a day last week.


Volume on the Russian Trading System, where most trading takes place, shot up to $21.2 million Friday.


The largest gain over the week was posted by Moscow Telephone, up 22.64 percent to close Friday at $487.5. Trade House GUM rose 20.88 percent, to $22, and Lenenergo was up 18.87 percent, to $0.315.


Bedenov said orders were driven mostly by local players because "the much anticipated influx of the foreign capital did not happen."


"There is no evidence that Western capital is rushing in," he said.


This week's big decliners included two of Sidanco's oil production units: Kondpetroleum was down 11.68 percent, to $1.625, and Chernogorneft was off 11.39 percent, at $8.75.