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. Last Updated: 07/27/2016

Confidence Returns As RTS Passes 2,000

The RTS index at last broke through the 2,000-point barrier last week, reaching an all-time high of 2,061 points as the stars came into alignment for recovering local markets.

Almost every major sector gave investors a reason to buy.

British-Australian miner Rio Tinto's top-dollar takeover of Canadian aluminum miner Alcan on Thursday boosted global valuations for the metals sector and made Russian firms such as Mechel look cheap. The miner jumped 8.9 percent for the week.

Comstar (CMST), the country's leading broadband Internet provider, saw an astounding two-day rally of 21.6 percent after four brokerages in as many days upgraded the stock, and Sberbank (SBER) got momentum from its upcoming share split, gaining 5.7 percent for the week.

Agriculture stocks such as Razgulyai (GRAZ) got a boost from the state's five-year plan, announced Thursday, to spend $43 billion on supporting this sector. The grain producer was up 6.3 percent.

Even the oil and gas names, which have seen a dearth of positive catalysts in recent months, found support from surging oil prices.

The price of Brent for August delivery was trading above $76 per barrel at the end of the week, the highest level since September. Rosneft gained 4.8 percent Thursday.

Gazprom's announcement that it would partner up with France's Total in developing the Shtokman field in the Barents Sea helped its stock rise 4.1 percent in the last two days of the week.

More general market sentiment was also rosy Thursday morning, as traders woke up to hear the news that U.S. indexes had seen their biggest one-day rally in almost five years. Taking this for a cue, along with similar news from Asia, investors bought "almost indiscriminately," according to Alfa Bank, and the RTS and MICEX both gained almost 3 percent on Thursday alone.

This followed a disappointment earlier in the week, when the RTS closed a fraction of an index point shy of the 2,000 mark, only to fall back by more than 1 percent Tuesday.

UralSib fretted on Friday morning over whether the rally was "another false dawn, of which there have been so many this year," but the RTS held above the elusive and psychologically important benchmark, gaining another 0.6 percent that day.

Perhaps the biggest credit for the jump should go to the outstanding liquidity conditions, as overnight rates on the foreign exchange market were just above 3 percent last week, allowing traders to borrow money cheaply for investments.

Nearly $4 billion was traded on the MICEX exchange Thursday, 55 percent higher than its four-week daily average, according to Deutsche UFG.

The week before, these rates were even lower. Standing at only 2.4 percent, they allowed investors to act fast on news of Sochi's successful 2014 Winter Olympics bid, which set up the bullish mindset that extended into last week.

The rally was also reflected in the global fund flows tracked by Emerging Portfolio Fund Research. Russia-dedicated funds took on about $60 million in new money last week, one of the best showings of the year.

As of mid-June, when the recent recovery began, $365 million had leaked out of these funds.