Entrance to Micex stock exchange in Moscow
After nearly two days of mandatory vacation the Micex and RTS stock exchanges opened again and set a new all-time record for one-day growth. The RTS dollar index grew by 22.39%, reaching 1295.91 points, while the ruble index of Micex grew by 28.69%, reaching 1098.95. The exchange indexes almost leveled themselves out to the pre-crisis levels. The week of trading resulted in the lowering of the Micex index by 3.4 percent and the lowering of RTS by only 0.2 percent. However, Russian media point out that the growth was artificial and possibly due to high liquidity, a result of the Russian government's unprecedented actions. Media disagree with many Russian financial experts and warn that external factors might precipitate a loss of market value once again.
Interestingly, the stock exchanges had to halt trading briefly on two occasions Friday due to the extremely fast pace of buying. Traders had only three hours of actual trading Friday, yet they managed to set a record. In addition to the measures described in Russia Blog's previous article, the Russian Federal Service for Financial Markets prohibited trading of borrowed assets that weren't fully owned and it prohibited the "short" sales. In addition, the Russian government made a firm statement that its decisions on tax cuts in the oil sector are definite and final. Several private companies, including Lukoil, bought back their own stock.
All the measures and actions aside, experts and media believe that the rebound was mostly influenced by the overall growth of the world market rather than the domestic actions of the Russian government.
The Index of Russian shares traded in London increased by 7.2% during the day, rising even than that in Canada (7%) and other countries that saw a steep climb. Oil and banking companies were the leaders of growth. Considering the drop of values just a few days ago, overall trading results were unprecedented. On the Micex stock exchange shares of VTB grew by 59.34%; Sberbank -- by 35.15%; Gasprom -- by 28.74%; Lukoil -- by 27.05%; and Rosneft -- by 46.30%. The growing value of the oil companies was also stimulated by concerns over Hurricane Ike and local conflicts in Nigeria.
Despite the positive news of the day, Russian financial experts have different points of view regarding the Russian markets' future. Some say that the positive correction was mainly supported by the world's markets growth and that Russian market will remain vulnerable to the deviations of American and European stock exchanges. A still more negative scenario is that the Russian Federal Service for Financial Markets might cancel its trading prohibitions, and that markets might then become vulnerable, this time for internal reasons. The earliest this change in trading prohibitions might take place, of course, is September 22.
"The December futures quotations on RTS showed very strong growth, adding 38% in value," said Igor Duel, analyst of Bank of Russian Development. "Thus, market players expect the average index growth to go up by nearly a third in the next three months!"
"The situation looks very positive and suggests very fast growth of Russian stock. The growth in the next several weeks might be in the range of 70-100% comparing to the recent lows," predicted Andrei Stoyanov, financial markets analyst for UK Rosbank.