Russian ADRs slump, trade heavy, blue chips focus
By Ian Simpson
NEW YORK, May 27 (Reuters) - Leading Russian ADRs fell in heavy trade on Wednesday after Russian markets took a
nosedive amid falling confidence in President Boris Yeltsin and his economic and tax reforms.
The Russian central bank tripled interest rates to 150 percent to protect the ruble from speculation. The Moscow share index
fell almost 11 percent to its lowest level since the end of 1996.
Dealers in ADRS - American Depositary Receipts - and analysts said trade centered on bargain-hunting and such blue-chip
issues as mobile telephone company Vimpel-Communications (VIP - news) and oil company LUKoil (LKOH.RTS).
They said trade was heavy but orderly, with no signs of the spiral downward seen in Moscow's exchange.
''It was very active early in the day,'' a trader said. ''We are seeing some market names coming in that had been quiet for
weeks.''
Constance Hunter, a portfolio manager at Firebird Management, said investors were seeking background on the economic
crisis and the tailspin in Moscow's stock market.
''People want to sift through the headlines,'' she said. ''The fact of the matter is that the market is overshooting - markets
overshoot all the time.''
''Unless you are a very high-bid investor, you don't have to be there (the Russian stock market),'' said Harold Ehrlich,
director of international equity research at Warburg Pincus.
''And if you have to be there, don't mess around with anything but blue chip companies, those that actually care about
investors.''
Analysts and traders said Russian ADRs also were roiled by speculation that the International Monetary Fund (IMF) would
mount an emergency aid package to bolster the Russian economy.
However, IMF Managing Director Michel Camdessus downplayed the turmoil. He told a news conference in Kyrgyzstan
that the markets' tailspin was not a crisis, and the IMF and Russia denied Moscow was seeking more support.
It is not clear when the IMF will disburse the next installment of a $9.2 billion loan.
''I would say that if the IMF thought that Russia was in trouble, was an Indonesia, they would be handing over large amounts
of funds. They are not,'' said Firebird's Hunter.
Among Russian ADRs, long-distance telephone company Rostelecom (ROS - news; RTKM.RTS) fell 1-1/2, or 8.8 percent,
to 15-1/2 and Vimpel-Communications was off 3-3/16 to 45-1/16.
Templeton Russia Fund Inc. (TRF - news) was off 2-1/8, or 8.1 percent, to 24 and the Morgan Stanley Russia & New
Europe Fund Inc.(RNE - news) fell 1-13/16 to 16-13/16.
Oil company AO Tatneft (TNT - news; TATN.RTS) rose 3/4 to 11-3/4. LUKoil, whose ADR trades over the counter and
not on a public exchange, was bid at 42 and offered at 44, up from 40-1/2 bid and 41 offered Tuesday.
ADRs allow U.S. trade of foreign shares.
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