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. Last Updated: 07/27/2016

Shares Rise on Cabinet Appointments




The Russian stock market Wednesday posted slight gains on news of Boris Nemtsov's appointment as deputy prime minister in the new Cabinet, reversing a two-day downward trend.


Investors in government securities got a big premium of up to 2.5 percent at Wednesday's treasury-bill auction, on hopes of strong demand Thursday.


Traders said the rise was purely speculative in the absence of investors. At one point, liquid shares rose as much as 2.5 percent before giving in to profit-taking.


The Moscow Times Index of 50 leading shares closed at 229.43, up 0.74 percent Wednesday. Russian Trading System recorded a volume of $63 million.


Analysts said the low volumes reflected a stagnation, rather than a rally which had been predicted earlier. They attributed the 6 percent drop earlier in the week to market correction in line with world markets which experienced a negative trend.


Wall Street and the European markets were hit by fears of a rise in U.S. interest rates. The Dow Jones on Monday lost 146.98 points to end at 8,917.64. London closed down 141.5 points while Frankfurt gave away 141.71 points.


"When the global markets staged rallies, we did not have a government. But when we finally got a government, the markets in U.S. and in Europe fell," Dmitry Konov, a trader at MFK Renaissance, said.


Konov said the Russian market is likely be flat until May 19 when the U.S. Federal Reserve is due to meet.


Some traders, however, were more optimistic of a rise, but on low volumes, during the May holidays.


"The market will be very narrow which will allow traders to spur a rally despite the lack of funds," said Andrei Galperin, senior trader at Creditanstalt-Grant.


Unified Energy Systems was the most heavily traded stock Wednesday, recording a volume of $28 million on RTS -- almost half of the day's trading. UES closed higher at $0.3149, up 0.5 percent for the day.


The government securities market posted a high yield of 31.5 percent for one-year T-bill at Wednesday's auction.


The strong demand for dollars also pushed interbank rates up to 80 percent during the day, Alexander Romashov, T-bill dealer at ING Bank, said.


Romashov said there will be demand for papers as investors will pick short- and medium-term papers ahead of holidays.