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. Last Updated: 07/27/2016

MARKET WRAP: Zadornov Resignation Expected To Shock Lifeless Stock Market




Russian shares ended the week up a quiet 2.79 percent Friday, but analysts said the removal late in the day of First Deputy Prime Minister Mikhail Zadornov and likely further political tension would overshadow the market next week.


Soon after trade ended, Zadornov, said to have been in a power struggle with fellow First Deputy Prime Minister Nikolai Aksyonenko, said he had been removed by President Boris Yeltsin.


"I don't expect the markets to greet this with a lot of optimism on Monday," said Nancy Herring, director of research at Regent European Securities in Moscow.


Indexes covering Russian equities on foreign markets that were still trading after the announcement did not react significantly to the news.


The dollar-denominated Moscow Times Index of 50 leading shares slid a mere 1.33 percent to close at 77.01 on volume of $10.49 million. The RTS index was off 1.22 percent at 99.09.


Zadornov said he had asked to step down and Yeltsin approved it. The dismissal apparently left Aksyonenko, a former railways minister with little economic experience, in charge of economic policy. The episode also raised doubts on political stability as a whole and what Prime Minister Sergei Stepashin would do next.


Analysts said Aksyonenko's lack of experience would cause doubts among investors about the country's economic course and its ability to negotiate the release of $4.5 billion in aid promised by the International Monetary Fund.


Analysts described Zadornov's firing as negative, but did not necessarily expect a dramatic reaction from investors.


"It could all settle in a few days but it could be bad news," said Peter Boone, head of research at Brunswick Warburg.