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. Last Updated: 07/27/2016

2nd-Tier Tigers Roar, Market Rallies 7.8%




Russia's steadily rallying stock market clawed its way up a further 7.8 percent this week, almost reaching levels like those of last August and driving the Moscow Times Index of 50 leading stocks within sight of 100.


The MT index jumped to 95.17 pushing year-to-date yield to a whopping 158 percent from a miserably low base.


Much of the week's action gains were on second-tier stocks as oil majors caught their breath after a hectic few weeks of renewed interest, to remain essentially unchanged in mixed trading. The second-tier tigers took over, especially in telecoms and energy, roaring toward record highs.


"Telecommunication stocks joined the bull run started by second-tier power companies last week," said Vladimir Sporynin, a trader with Fleming UCB.


Kubanelektrosvyaz jumped 25 percent to $9.25 while Samaraenergo surged almost 50 percent to $0.022 with more than a 100 percent gain in a two-week span.


Bashkirenergo propelled 20 percent up to $0.056, also doubling up in just two weeks.


Blue chips were more volatile but UES still gained 10 percent for the week to close at $0.08 on Friday. LUKoil lagged behind but ended the week $0.02 cents up at $9.92.


The market even shrugged off the government's failure to ram the gasoline tax law through the State Duma.


"The market believes that the government will now have to invent something else to raise tax revenues," Sporykin said.


Others said that the market has been pushed up as billions of rubles created by the printing presses slosh over from the banking sector into equities.


Russia's money base increased 5.6 percent in just one week, June 7-14, following a 2 percent increase the week before.


So far this year, the money base has grown 27.7 percent, with more than half of that growth coming in the past six weeks.


"Liquidity grows not only in the banking sector, but, first of all, in industry and services, which slowly pick up," said Kirill Maltsev, head of sales and trading with Rye, Man & Gor Securities.