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. Last Updated: 07/27/2016

Market Down Almost 3% Despite Late-Week Boost

The Russian stock market, which saw prices decline about 6 percent early in the week, recovered Thursday and Friday, but traders said the upturn was just a hiccup in a downward trend that could last until September.


The Moscow Times dollar-adjusted index of 50 leading shares gained 4.26 percent over the two days and closed at 351.02 Friday, still down 2.72 percent on the week. Twenty-one issues posted gains for the week, 22 stock declined and 7 were unchanged.


"Blue-chip prices fell to a level where they were attractive to buy," said Samit Yakovlev, a senior trader at United City Bank.


Traders attributed the growth to Russian banks, which they said moved funds into blue-chip stocks, with foreign demand concentrated in certain sectors of second- and third-tier shares.


"Now 70 to 80 percent of investors in the market are Russian banks because they have no investment alternatives," said Andrei Kukk, a trader at Rinaco-Plus. He predicted a smooth 3 to 4 percent decline in prices over the next month or two.


Traders attributed the late-week growth in part to President Boris Yeltsin's decree to set up a commission to protect investor rights and a national depository.


The biggest gainer among blue-chips over the last two days was Rostelekom, which rose 7.4 percent to finish at $4.50 Friday on rumors that the company's new charter would fail to pass a shareholder vote, traders said. The charter would give the firm permission to double the number of its stocks on the market. But despite the gains, Rostelekom was still down 3.4 percent on the week.


Norilsk Nickel, which was up 7 percent Thursday and Friday, was down 5 percent on the week and closed at $13.15 on Friday. Kukk attributed the late-week increase to Renaissance Capital's continued buying of the company's shares. "Renaissance is playing a big game that nobody understands," he said.


But it was second- and third-tier oil companies that were the biggest winners this week, Noyabrskneftegaz, Yuganskneftegaz, Komineft among them. Nizhnevartovskneftegaz gained the most, closing at $18.7 on Friday, up 38.5 percent for the week.


In the fixed-income market, average waited treasury-bill yields edged up to 18.17 on Friday from 18.05 last week.