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Russian stocks suspended amid surge
Friday September 19, 9:18 am ET
By Catrina Stewart, Associated Press Writer
Russian stock exchanges suspend trading twice after shares rise sharply
MOSCOW (AP) -- Russian stock exchanges halted trading Friday after stocks shot higher, rebounding off a two-day closure amid a financial crisis as the government rushed through emergency measures that included more money for banks and purchases of shares to stem plunging prices.
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Exchanges suspended trading for a second time in just several hours of trading Friday after shares on the benchmark RTS and MICEX surged by 20 percent and 26.3 percent, respectively. Trading was to resume later in the day.
Stocks bounced back after the government rushed through a series of emergency measures -- amounting to some $120 billion worth of relief -- in the shape of increased liquidity to the banking sector and share purchases on the domestic markets.
The stock-markets surge came amid a global recovery in markets Friday after the U.S. took steps to limit damage from a seize-up in world credit markets following the forced private sale or government takeover in recent days of Wall Street institutions such as Lehman Brothers Holding Inc. and American International Group.
The dollar-denominated RTS halted trading for a second time Friday at 1:55 p.m. (0955GMT) after suspending trade in several stocks including Lukoil, which jumped by nearly 20 percent. On MICEX, shares in state-controlled bank VTB and state-controlled oil company Rosneft jumped by 60 percent and 45 percent, respectively, before trading was suspended.
"I expect a very athletic time for the next few days to few weeks," said Eric Kraus, an adviser to Otkrytiye brokerage. "Falling and rising in great percentages is to be expected."
The resumption of trading, after being pushed back twice, has been set for 5:15 p.m. (1315GMT). MICEX, shut down at 2:15 p.m. (1015 GMT), is also to reopen then. The close of trading is set for 6 p.m. (1400GMT) on the RTS and 5:45 p.m. (1345GMT) on MICEX.
Normal trading on both indexes was closed down on Wednesday after the MICEX suffered one-day losses on a scale not seen since Russia's 1998 financial collapse. It plunged 25 percent in just 2 1/2 days on the back of tumbling oil prices and Wall Street turmoil, and was down more than 55 percent since its May peak.
Finance Minister Alexei Kudrin elaborated Friday on the scope of share acquisitions, saying that the government would invest primarily in state companies, the Interfax news agency reported. But he added that the state could also buy shares in listed companies that it considers undervalued.
Banks borrowed just 151 billion rubles (about $6 billion) through the Central Bank's daily "repo" auctions Friday, considerably below the 400 billion rubles available. There was to be a second auction later in the day.
Speaking at an investors' meeting in the Black Sea resort of Sochi, Prime Minister Vladimir Putin told investors that, because of Russia's huge foreign-exchange reserves and other surpluses, Moscow could still balance the budget for the next three years even if oil drops to between $40 and $50 a barrel. Oil has fallen below $100 after reaching a record $147 a barrel in July.
Despite assurances from the government, however, it may take longer for the wounds to heal, after investors suffered huge losses on the Russian stock markets.
"People were skinned alive," said James Fenkner, managing director at Red Star Asset Management. "They got creamed ... It's going to be a while before they come back."
Ratings agency Standard & Poor's changed its outlook on Russia's long-term sovereign credit ratings from "positive" to "stable," in light of what it described as growing uncertainty regarding the country's response to the liquidity crisis.
"Russia's fiscal and external buffers remain formidable, but are likely to suffer over the next 12 months as banks are re-capitalized and financial account net inflows decline or even reverse," said the agency in a report.
Associated Press Writers Nataliya Vasilyeva and Ayano Hodouchi contributed to this report. |
