Almost like before the crisis

The RTS index reached the levels of the end of 1997

The rise in the domestic stock market, which has been observed in recent days, continued yesterday, although the RTS exchange index was unable to overcome the 500 point mark. The main indicator of the Russian market has come very close to this psychologically important line, once again reaching its maximum value since the end of 1997. According to analysts and brokers, “conquering” the top is not far off as the market is on the rise. The main thing is not to interfere with his successful development. However, trade volumes are almost not increasing, and the index is growing mainly not on the influx of new money from the West, but on the positive mood of local players. Market participants themselves believe that this is natural: since a “class of domestic investors” has been formed.

Trading on the RTS yesterday, as on Monday, opened with an increase in quotations, which continued throughout the day. Only in the evening there was a slight correction - from 497.8 the index dropped to 495.5 points (the opening value of yesterday's trading was 491.91 points). The leaders of influence on the index were securities of oil companies: shares of LUKOIL, YUKOS and Surgutneftegaz grew by 4-10%. “The growth of quotes took place on a growing volume, the index set a new high, Western indices rose, so today speculators have no compelling reason to play short. We expect continued growth,” says Maxim Shein, head of the analytical department of BrokerCreditService.

The shares of Tatneft and Mosenergo showed the greatest growth yesterday. The purchase of energy company securities has intensified due to “a decrease in uncertainty in the industry, as well as a significant improvement in the financial condition of investors, who are quite actively purchasing undervalued securities,” notes Lauri Silantako, an analyst at the Troika Dialog investment company. In his opinion, shares of regional energy companies will rise in price following the significant rise in price of securities of RAO UES of Russia and Mosenergo. As for Tatneft, the market is waiting for the results of the reorganization of the petrochemical sector of Tatarstan and is counting on its greater openness to external shareholders.

As many brokers expected, yesterday it was not possible to cross the 500 point mark. However, it is possible that in the near future the RTS index will consolidate at a level close to 520 points. “Sellers are not so primitive as to “stand” at one price. Such growth may continue for another week,” Andrei Novikov, head of the securities department of the Moscow Credit Bank, noted in an interview with a correspondent of the Vremya Novostey newspaper. -- Market growth is also due to the fact that gold and foreign exchange reserves are growing, and revenues are converted into rubles. But as long as oil prices remain high, there will be no big problems. The market may well approach the level of 520 points.”

“The market is really on the rise,” says Anatoly Gavrilenko, chairman of the board of directors of the investment company Alor-Invest. -- Within three years after the 1998 crisis, a class of domestic investors was created in Russia who spend their own money, not the money of foreign companies. And the Russian investor feels comfortable in the current conditions; they just need to let the market develop. And now foreigners themselves play by our rules.”

“Political stability gives professionals confidence in the future,” continues the head of Alor-Invest. Andrey Novikov from MKB echoes him: “It’s unlikely that we should expect speculative demand in the market now, but rather strategic demand for a long time.”

Alexey ROZHKOV