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. Last Updated: 07/27/2016

Oil Investment News Cheers Market

The Russian market this week shrugged off the battering it has taken in recent weeks, gaining almost 11 percent as investors were cheered by the announcement of big investments by foreign oil firms, analysts said.


But traders are still divided over whether this improvement represents a steady upward trend or whether things will continue to see-saw for some time.


The Moscow Times Index of 50 leading shares rose 2.84 percent Friday, closing the week up 10.49 percent at 288.07.


"It's been growth, growth, growth all week," said Andrei Kukk, a senior trader with Rinaco Plus.


Kukk said foreign investors began to buy after taking a cue from capital promised for Russia in Royal Dutch/Shell and British Petroleum investment deals. "An awful lot of money, by Russian standards, was poured in, and foreign investors saw it as an encouraging signal," Kukk said.


But another analyst suggested that foreign investors, who continue to be the driving force of the market, were sending mixed signals, some selling and some buying.


"Today, buys have exceeded sales. But, tomorrow, sales may exceed buys," said Mikhail Koltsov, a trader with the Renaissance.


LUKoil served as the locomotive of this week's growth, with other blue-chip companies also moving upward. LUKoil rose from $17.56 to $21.3 over the course of the week.


Unified Energy Systems and Rostelekom share prices also rose, from $0.242 to $0.263 and from $2.66 to $2.93, respectively.


The market was largely undisturbed by the scandal surrounding First Deputy Prime Minister Anatoly Chubais and responded to it with "reserved optimism," said Alexei Dolgikh, a senior trader with Troika Dialog.


But even greater than the impact of Chubais' fate on the market was the positive impact of world market trends, Dolgikh said. He warned, however, that despite the week's uptick, there is still no clear trend in the market's behavior.


"I don't think it is a turnaround yet. Time will show whether it has been a correction or the start of an upward trend," Dolgikh said.


The recent exodus of foreign investors from Russian treasury bills has lead to a fall in the long- and medium-term paper, said Alexei Bazelin, who heads the debt instruments department at Rinaco Plus.


As a result, he said, the short-term paper has become somewhat overheated, reversing the usual price-yield curve and necessitating Central Bank intervention.


Investors will be in for a few tense days as they watch whether the Central Bank will keep the same rules, or whether the market will be allowed to gyrate, Bazelin said. "Should investors fail to see a bottom to the fall, they may get panicky," he added.