Kiriyenko approved - no big surprise to the markets. We
are going up so far, though.
MOSCOW, April 24 (AFP) - Russian markets took the confirmation
of Sergei Kiriyenko as prime minister in their stride, with
equities, government bonds, traders and analysts all welcoming the
appointment as good news for the economy.
Equities were up more than one percent on Thursday's close as
deputies in the State Duma lower house of parliament approved the
Kremlin candidate by 251 votes in favour to 25 against, traders
said.
The RTS index, one of several leading indicators of the Russian
equity market, stood at 326.16 at 6:00 p.m. (1400 GMT), compared
with 322.1 at Thursday's close, a rise of 1.2 percent on the day,
and 4.3 percent on last Friday's close.
"He got through very much as people were expecting," said Tom
Brackenbury of the Rinako Plus brokerage. "Then there was a little
bit of profit-taking from the trading community. There was no surge,
as the market expected him to get through."
The Russian equity market, the second worst performing market in
the world in 1998, slumped up to 10 percent after Yeltsin sacked the
government a month ago and appointed Kiriyenko to breathe new life
into reforms.
Equities surged more than two percent earlier Friday after
deputies decided to cast their votes in a secret ballot, the market
interpreting the move as likely to deliver victory to Kiriyenko.
The market is likely to stage a more sustained rally next week,
given the resolution to the month-long political uncertainty,
brokers said, a view to which Central Bank First Deputy Chairman
Sergei Aleksashenko also subscribed.
Bond yields meanwhile eased, according to Maxim Safonov, a
trader with ING Bank in Moscow, to around 31 percent for benchmark
one-year notes amid "aggressive demand from foreign investors."
"This rate now is very attractive to buy," Safonov said.
"Kiriyenko means the continuation of reforms, monetary policy and of
the ruble. On the other hand, there is still some political
uncertainty as no one knows who will be in the cabinet."
"Kiriyenko's speeches are far more bullish than our market,
which is underperforming by comparison."
The ruble meanwhile showed little reaction to the vote, changing
hands at 6.124/6 to the dollar in late afternoon trade.
Kiriyenko has stressed his government will make fiscal
discipline, defence of the ruble and high economic growth key planks
of an economic platform which economists say will please investors
and the International Monetary Fund.
But the tasks ahead of the young reformer remain immense.
On Friday, Kiriyenko rattled off a long list of measures before
parliament which the government is planning to implement just for
starters: aid to the coal and precious metals sector, a boost for
the struggling oil industry and reform of the inter-regional
budgetary system.
On a broader level, the new premier will have to keep a tight
rein on the public purse strings to make sure that the punctured
budget does not leak excessively, analysts said.
"The only way they are going to be able to get the deficit under
control in the long-term is by reducing the need for expenditure at
the federal level and also at the regional level," said Rory
MacFarquhar of the Russian-European Centre for Economic Policy.
"There might be a slight acceleration in the pace of reform but
there might also be greater difficulties in coming to agreements
with the Duma and a major difficulty in facing down large industrial
lobbyists," MacFarquhar added.
Kiriyenko will gain an immediate assessment of the economy he is
inheriting on Monday, when an IMF team is due to arrive in Moscow to
review Russia's first quarter macroeconomic indicators.
If the data matches up to strict IMF targets, the IMF board will
consider releasing the next tranche of a 10.2-billion-dollar loan in
the second half of May, Interfax said.
Kiriyenko indicated that he expected one key indicator -- gross
domestic product growth -- to surge ahead early next century to
around five to six percent annually, adding that the growth figure
must top 1.5-2 percent this year.
Real GDP was flat in the first quarter of this year in
comparison with the same quarter in 1997. |
