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. Last Updated: 07/27/2016

MARKET WRAP: Shares Leap as Bulls Start Running




The stock market ended on a high note Friday, capping a week that had seen the interrupted bull run of mid-June resume with new year records for The Moscow Times Index andtrading volumes.


Driven by a two-year record for Russian Urals blend oil, the MT Index of 50 leading stocks hit 102.71, up 2.06 and at its highest level since August of last year. Trade volumes were $30.24 million, their highest level for a year.


The MT Index climbed a striking 8.9 percent during the week, after opening Monday morning at 94.32. The market rose 35 percent in June, despite a correction that lasted for about a week toward the end of the month.


U.S. finance house Goldman Sachs released a report recommending that investors buy Russian assets due to better than expected prospects for the economy, including a forecast rise in industrial output of 7.8 percent this year, Reuters reported.


Power firms and telecoms led the charge Friday, with major blue chip Unified Energy Systems nearly breaking the 10-cent level at $0.093, a 1.43 percent rise on the day and a 9.4 percent rise on the week. That may not sound terribly impressive, but the stock has almost tripled this year after starting 1999 at $0.031.


The strength of the market came as no surprise to analysts, who had said that the late June correction would not last and that the bulls would return.


"The market is still very robust," James Fenkner, equity strategist at Troika Dialog, said. "We see real strength in some shares, like UES, which is a sign that the market will broaden."


The power monopoly's strong performance signals that demand for underlying shares such as Chelyabenergo, Novosibirskenergo and Kubanenergo is also going to grow, he added.


Chelyabenergo jumped 10.53 percent Friday to close at $0.042. Sverdlovskenergo was one of the best performers of the day, up 27.27 percent to $0.084.


Meanwhile, oil stocks were mostly strong. Surgutneftegaz closed 2.28 percent higher at $0.1750 and Sibneft was up 1.82 percent to $0.336. LUKoil closed down Friday at $10.35, but it was still up 5.6 percent for the week.


"Buyers are moving in on all fronts," said Alexander Bobolev, a trader with Aton. "There is stable demand on the part of foreigners."


A rally in Russian stocks on the New York Stock Exchange this week also contributed to the rise, traders said.


The oil stocks rally was partially fueled by expectations that the ruble may weaken if the government and the Central Bank follow through on commitments made under an International Monetary Fund program to further liberalize foreign exchange regulations.


Nevertheless, most market experts played down concerns that a dramatic fall in the ruble might come, destabilizing the market. The Central Bank was still fully in control and had enough influence on surviving commercial banks not to allow them to drive the ruble down, analysts said.


Traders predicted that the steady rise in the stock market will continue as long as the economic factors that generated it f climbing oil prices, production growth, a stable ruble, the trade surplus and resulting growth in hard currency reserves f remain in place. For the next few months, "it would take a catastrophe to move the market down, not much to move it up," Fenkner said.