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UPDATE 1-Russia's shares set to rally? Not just yet
September 26, 2012 / 3:06 PM / 5 years ago

UPDATE 1-Russia's shares set to rally? Not just yet

* Polls shows Russian shares to gain
    * On Wednesday, assets down across board
    * Shares pressured by global pessimism
    * Rouble down on sliding oil
    * Treasury bonds auction positive surprise

 (Adds poll, comment, latest prices)
    By Lidia Kelly
    MOSCOW, Sept 26 (Reuters) - Russia's shares are poised to
rally in coming months, a Reuters poll showed, but on Wednesday
dropping crude prices and investors' waning confidence in the
health of the global economy pushed Moscow assets down across
the board. 
    At 1430 GMT, the country's benchmark dollar-denominated RTS
index was trading 3.47 percent lower at 1,458.47 points.
    That is to change, according to a Reuters poll of analysts
who envisage the RTS index rising to 1,675 points by year-end,
or nearly 14 percent higher from Wednesday. 
    Investors are closely watching consequences of the stimulus
actions recently taken by central banks across the world. But
more market players are expressing concerns that a positive
effect might be short-lived.
    "Looks like the party has not lasted for long, and this is
surprising. It is unclear why unambiguous statements made by the
ECB and the Fed had such a short-term influence on market
players," said Evgeniy Monakhov, head of equity sales at
Deutsche Bank in Moscow.
    Polled analysts remain optimistic that the U.S. Federal
Reserve's recent stimulus measures will eventually have an
impact, with extra liquidity benefiting Russian markets.
    On Wednesday, nonetheless, RTS's peer, the rouble-traded
MICEX index, fell 2.63 percent during the session to
1,443.59 points, below the key support level of 1,480 analysts
had seen as important for deciding future bets.
    "Russian bulls (lost) the growing momentum," Andrei
Tolstousov, head of asset management at Grandis Capital, wrote
in a note.
    Tolstousov reckons, that with Moscow's trading behaviour
staying so acutely sensitive to developments on global markets,
MICEX can soon go down to 1,430 points - a level last seen in
early September before market euphoria over the U.S. Federal
Reserve's new stimulus measures.
    The Russian bourses on Wednesday underperformed the broad
emerging markets MSCIEF index which was down 1.3
percent, behaviour typical of a beta market that outperforms
when there is wide global optimism and quantitative easing but
underperforms when risk aversion returns.
    Steel and mining shares were among the top losers as has
been traditional when investors start ditching risky assets. The
metal and mining index on the MICEX exchange was down
3.5 percent.
    New-York-listed steel and coal miner Mechel 
 led the pack of losers at MICEX, trading 5.7 percent
lower, while the steel major Severstal was down 3.2
percent.
    The Russian rouble shared the fate of Moscow assets, losing
additional firming support from the monthly liabilities payments
that peaked on Tuesday. 
    Falling crude prices - Russia's chief exports - sped up the
rouble's slide. Front-month Brent futures have fallen
below $109 a barrel, their second drop in three days, on worries
that a fragile global economy could hit demand.
    The rouble was 1.0 percent down at 31.28 against the dollar
 on the day. It lost 0.14 percent versus the euro
to trade at 40.16 and it was down 0.57 percent at
35.27 against the dollar-euro basket, which the
central bank uses to guide the rouble's nominal exchange rate.
    The finance ministry's weekly OFZ treasury bonds sale, at
which five-year papers worth 20 billion roubles ($646.20
million) were auctioned, was an unexpected success,
attracting solid demand and selling below secondary market
yields. 
     "At the moment, there is a lot of homeless money in the
West seeking to find any income, while Western markets offer
lower yields," Danske Bank analyst Vladimir Miklashevsky said.  
 
 Russian Markets                       Latest  Net Change  % Change  % Change on
                                                                            year
 STOCKS                                                                         
 MICEX                                1443.59      -39.02     -2.63        2.95 
 RTS                                  1458.47      -52.49     -3.47        5.54 
 London ADRs                           844.24      -31.66     -3.61        8.45 
 Emrg Mkt Indx                         988.25      -13.60     -1.36        7.84 
 MSCI Russia                           783.81      -28.59     -3.52        6.39 
 Sberbank                               91.11       -2.64     -2.82       15.53 
 VTB                                     0.05       -0.00     -4.29       -9.48 
 Gazprom                               157.30       -3.57     -2.22       -8.17 
 LUKOIL                               1899.10      -41.10     -2.12       11.55 
 Rostelecom                            133.49       -3.51     -2.56      -12.18 
 Dollar/Rouble                          31.28        0.32      1.02       -2.71 
 Euro/Rouble                            40.16        0.06      0.14       -3.78 
 Rouble basket                          35.27        0.20      0.57       -3.26 
 DEBT                                     Bid         Ask      %Rtn       Coupon
 Russia 10-yr bond                       7.79        7.76      0.22         7.60
 MONEY MARKET                             Bid         Ask     Close             
 Overnight rate                          6.10        6.60      6.05             
 All data taken from Reuters at 1430 GMT
($1 = 30.9502 Russian roubles)

 (Reporting by Lidia Kelly; editing by Stephen Nisbet)

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