Translated material
past the market
Investors are waiting for clarity with the successor
The Russian stock market ended the last pre-election week on an optimistic note. However, the growth was mainly due to external factors. The current, as well as the previous parliamentary elections in 2003 , had virtually no impact on investor sentiment. The most powerful surge in the activity of stock market participants was recorded in 1999 - the strengthening of parties loyal to the Kremlin pleased both foreign and domestic players, and the RTS index jumped by almost 10% in a day.The main rise of the stock market on Friday occurred in the morning following the growth of indices in Europe. The pan-European blue chip index FTSEurofirst-300 added 0.57%, the British FTSE-100 - 0.42%, the German DAX - 0.68%, the French CAC 40 - 0.65%. European stock markets were filled with positivity thanks to comments from the US Federal Reserve, which demonstrated readiness for further rate cuts. Federal Reserve Chairman Ben Bernanke said that turmoil in the financial market has led to a decrease in the availability of credit, and this could negatively affect the entire US economy. In general, he characterized the situation in the American economy with a “greater than usual” degree of uncertainty. Futures quotes for the level of the base interest rate on Friday estimated the probability of its reduction by 0.25 percentage points at the meeting on December 11 at almost 100%, and immediately by 0.5 percentage points at 30%.
As of Friday's results, the RTS index rose by 1.82%, to 2220.11 points, and the MICEX index by 1.54%, to 1850.64 points. “The increased quotations of Gazprom shares made the greatest contribution to the increase in the RTS index,” notes Promsvyazbank analyst Oleg Shagov. -- The rise in prices for Gazprom shares was stimulated by the announced intentions to switch to payments for gas in rubles. However, the decline in oil prices, which occurred against the backdrop of the forecast for an increase in OPEC oil supplies at the upcoming meeting in Abu Dhabi on December 5, restrained the increase in quotations of oil securities.” At the end of trading, Gazprom shares added 2.62%, LUKOIL - 1.1%, RAO UES - 1.05%, Norilsk Nickel - 1.38%.
Expectations related to the parliamentary elections did not influence the behavior of market participants. Although, as some experts note, traders expect that, based on the voting results, political prospects for the next few years will be more definite. According to Invest Capital management analyst Elena Guseva, after the parliamentary elections, if United Russia dominates, the name of the presidential successor can be expected to be announced, which will be an additional incentive for market growth.
It is noteworthy that over time, parliamentary elections lost their influence on investor behavior. In 1995, stock market participants hoped for a victory for right-wing democratic parties. Against this background, since the beginning of December, the RTS index has grown by 13.52%. However, the elections held on December 17 disappointed investors, and the market corrected by 1.22%. The Communist Party of the Russian Federation then received 22.3% of the votes, the Liberal Democratic Party - 11.18%, the pro-government bloc “Our Home is Russia” - 10.13%, and Yabloko - 6.89%.
The elections of December 19, 1999 caused a real stir in the stock market. The RTS index grew by 9.05% the next day. The trading turnover of the Russian stock market approached $70 million, which was twice the traditional volume of that time. Moreover, on the second day after the elections, investor activity did not dry up, and the RTS index managed to add another 7%.
Then the market, weakened by the 1998 crisis, actually received hope for a “breakthrough into the 21st century.” Investors decided that parties interacting with the Kremlin, which received a large number of seats in the Duma, would be able to pursue a competent financial policy. Foreign funds, convinced of the profitability of investing in Russia, were especially inspired; the largest Western investment banks increased their recommendations for major Russian securities. Let us recall that according to the results of those elections, the Communist Party of the Russian Federation was in the lead, gaining 24.29% of the votes, and the newly created pro-Kremlin Unity party received 23.32%. They were followed by "Fatherland - All Russia" (13.33%), "Union of Right Forces" (8.52%), Zhirinovsky Bloc (5.98%) and "Yabloko" (5.93%).
The previous elections, held four years ago, did not make much of an impression on investors. The market greeted the victory of the party in power and the loss of the right-wing parties Yabloko and SPS factions in the State Duma by an increase in the RTS index by 0.95%. However, this growth had no political overtones.