02/22 11:44 Russia shares leap higher by close, some sceptical
By Olga Popova
MOSCOW, Feb 22 (Reuters) - Russian shares ended up sharply on Monday, as the market motored on the fuel of optimism over a domestic debt swap and speculative plays after its recent rally, dealers said.
But some were sceptical about the recent gains, saying the battered market was still for the high-risk player.
The leading Russian Trading System (RTS) over-the-counter market saw healthy trade of $12.08 million and the RTS1-Interfax index <.IRTS> ended 7.38 percent higher at 75.40, its highest since August 26 last year. The broader Reuters Composite <.RRC1> closed up 14.10 percent at 215.40.
"The main advantage is that if there is anywhere to speculate, it is in Russia," said Dresdner Kleinwort analyst Alexei Kapkin. He said the long-term picture was gloomy.
"Taxes need to be collected, interest rates need to fall, companies need to show good results and the price of oil needs to rise...Until then, all this is pure speculation on insignificant volumes."
Speculative interest was sparked after shares began a rally two weeks ago when the finance ministry said cash from a swap of restructured domestic debt could be invested in equities.
Investment guru Mark Mobius of Templeton fund managers also gave the market a boost when he predicted last week that Russia would be the best-performing emerging market this year. It was the worst-performing last year.
But activity was not broad-based, concentrated in a few stocks which are considered blue chips, traders said.
These include oil firms LUKOil <LKOH.RTS> and Surgutneftegaz <SNGS.RTS> and electric grid giant UES <EESR.RTS>, which all showed good rises and reasonable volumes.
LUKoil turned over $4.09 million for a 11.78 percent rise to $5.813, UES traded $2.59 million to gain 14.44 percent to $0.0515 and Surgut added 11.03 percent to $0.1077 on activity of $2.20 million.
"All the negative news has been discounted and the market has seen new levels...Russia is interesting now for those who are buying paper for the long term and have an appetite for high risk," said a trader at one Western company.
"People are trading at the moment with their eyes closed, they do not want to see anything bad," said another trader at one London bank.
He said some investors were switching into Russian ADRs from other eastern European markets.
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