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. Last Updated: 07/27/2016

Stocks Gain 9.76% in Heavy Trading




The New Year craze for Russian stocks was given a further boost Monday by a government reshuffle that promoted Finance Minister Mikhail Kasyanov to sole first deputy prime minister.


After the latest gain of 9.76 percent on Monday, Russian equities have now jumped just over 30 percent since President Boris Yeltsin's Dec. 31 resignation sent an already optimistic market soaring. The Moscow Times index of 50 leading shares rallied 12.76 points to close at 152.63 on Monday - the market's fourth straight gain - up 12 percent over the three trading days so far posted this year.


The dollar-denominated MT index saw spectacular volumes of $41.5 million, more than double average market volumes last month. The RTS-Interfax 1 index rose 3.63 percent to 192.25.


The market opened strong Monday, the start of the first full working week after the New Year and Russian Orthodox Christmas holidays, leaping 4.98 percent within the first 90 minutes of trading.


Profit-taking and jitters over the announcement of an extraordinary shareholders meeting by star performer Surgutneftegaz hit gains at mid-day. But the afternoon demotion of interventionist First Deputy Prime Minister Nikolai Aksyonenko - widely seen as a corrupt Yeltsin crony - and the promotion of Kasyanov, regarded as a relatively strong supporter of free-market policies, rejuvenated investors, traders said.


Acting President Vladimir Putin's decision to promote Finance Minister Kasyanov and fire Aksyonenko finally gave investors a long-awaited indication of what Russia's economic course could be, sending them scurrying back to the market with renewed enthusiasm, traders said. Kasyanov, who has successfully led Russia's debt negotiations with the West - stalling both the London and Paris clubs of creditors without unduly offending either - is a favorite with investors who see him as a Western-minded reformer.


"The appointments mean that Putin is paying much more attention to the economic and financial blocks of the government," said Kirill Maltsev, head of equity sales and trading at Rye Man & Gor.


Some traders said they were caught off guard by Monday's strong showing after having expected the market to correct slightly following the huge gains of the past few trading sessions. Shares had leaped 18 percent in afternoon trading after word of Yeltsin's resignation leaked out. Shares rose 2.14 percent Wednesday and 3.64 percent Thursday, in the two days of trading last week.


Monday's mid-day correction came on the heels of oil company Surgutneftegaz's announcement that it would hold an extraordinary shareholders meeting Feb. 10 to decide on conversion of shares in the Surgut holding and its daughter companies. Investors began to speculate over the outcome of the meeting and many feared that their Surgut stock was overvalued, traders said.


Surgut shares took a drubbing Monday, falling 10.6 percent to 0.307 cents after hitting a life-time high last week.


After parliamentary elections in December gave pro-market reformists a stunning win, traders had predicted the market would grow by 200 percent to 300 percent this year.


Those expectations remained strong Monday, and market players predicted that January could be the month of the bull.


"As long as the situation in Chechnya does not deteriorate rapidly, we could seen strong growth in January," said Martin Diggle, director on sales and trading desk at Brunswick Warburg.