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. Last Updated: 07/27/2016

Stock Market No. 3 In World This Week




The Russian stock market took third place in the list of best-performing markets around the globe this week and traders say the buying pressure is not losing steam and only a bad election outcome could dampen the rally.


"We sold everything we wanted to sell and could not buy at cheaper prices," Andrei Kukk, a senior trader with NIKoil brokerage, said Friday.


"When the market edged down in the middle of the week, people looked at it as a buying opportunity," said Kirill Maltsev, head of sales and trading with Rye, Man and Gor.


The Moscow Times index surged 6.16 percent to close at 90.34 Friday, while the RTS index skyrocketed to 118.26, up 6 percent on weekly volume of $66.5 million.


Both global and domestic factors were driving the market up.


The U.S. Federal Reserve hiked interest rates by 25 basis points to 5.5 percent this week but changed its outlook to neutral, and Dow Jones leaped upward, topping 11,000 closer to the end of the week.


The euro dropped to a four-month low of 1.0246 Friday before bouncing back on rumors of intervention by the European Central Bank.


It is widely believed that U.S. stock markets are poised for new gains.


"The U.S. economy is a freight train right now. Why bet against the buck?" Rich Spugnardi, vice president of Bank Julius Baer, said in remarks reported by Reuters.


"The markets now believe that prospects are clear for another bull run in the U.S," said Kirill Gromov, head of domestic sales with Prospect brokerage.


Even though the government failed to reach an agreement on Soviet-era debt with the London Club, negotiators said a deal could be around the corner.


While earlier signs of hope were broadcast only by the Russian side, this week Deutsche Bank moved in to confirm that an agreement was close.


Russia's Eurobonds and the London Club instruments extended last week's gains with yields declining further down, to close to 20 percent.


Domestic debt was up on the strengthening ruble, and yields declined below 90 percent.


The Russian stock market was one of the top three performers this week, yielding only to two of Russia's neighbors - Finland and Poland.


"There is new money coming in," Gromov said. "There are plenty of buyers around, so we expect the bull run to continue."


NIKoil's Kukk said it was unclear what the results of the Dec. 16 State Duma elections would be and betting on their outcome would be a pure gamble.


First-tier stocks led the charge this week but the market is becoming broader, although low liquidity keeps some buyers on the sidelines.


"If you buy a relatively large number of shares, you often have to offer a premium of some 20 percent to 25 percent," said James Fenkner, equity strategist with Troika Dialog brokerage. Fenkner cited Sberbank as an example.


Norilsk Nickel was one of the best performers this week. The stock surged 19.5 percent to $4.30 per share after the Duma passed on first reading an amendment to one of the budget laws, allowing Norilsk Nickel to export platinum.


===


WORLD MARKETS


Best and worst performers*


Country Change


Finland +9.70%


Poland +8.22%


Russia +6.46%


Thailand -4.61%


Philippines -2.82%


Argentina -2.45


*11/12/99 to 11/19/99


Source: Bloomberg