08/07/1998 10:56:06 Russian shares tumble early on foreign selling
By Olga Popova
MOSCOW, Aug 7 (Reuters) - Russian shares tumbled more than
five percent in early trade, wiping out what was left of the
fragile recovery that followed last month's agreement on a new
international credit package, dealers said.
Reuters real-time composite index <.RRC1> was down 5.38
percent at 88.17 by 1050 GMT. The RTS1-Interfax index <.IRTS>
was down 4.04 percent at 130.39 after hitting a new low for the
year and the lowest levels in more than two years.
"We have probably already reached those levels to which we
fell the last time (in July)," ING Barings trader Oleg Galkin
said. "There are absolutely no buyers."
Russian market sentiment was damaged by falls in Hong Kong
and Tokyo amid fears over the stability of China's yuan, and by
higher yields on domestic treasury bills.
"The West is no the main impetus behind the fall," Galkin
Russian GKO t-bill and OFZ bond yields jumped to 90-95
percent annual in thin trading, compared with 78-82 percent on
Thursday following the central bank's announcement that it would
auction six billion roubles of new paper next week.
"There isn't much money and, with the announcement of
unpopular auctions, people are nervous," said Rossiisky Kredit
trader Konstantin Svyatny.
"Besides, the news about our foreign debt does not inspire
optimism," he said, referring to a drop to record lows of
Russia's dollar-denominated debt on international markets.
Svyatny said the most active sales of domestic debt were for
paper maturing in November.
The finance ministry is due to auction three billion roubles
of GFO paper -- a new type of bearer bond aimed at private
retail investors -- and three billion roubles of fixed-rate OFZ
bonds on Wednesday.
On the stock market, shares in bellwether national
electricity firm UES <EESR.RTS> dropped to $0.1100 at 1050 GMT
from $0.1150 at Thursday's close.
Surgutneftegaz <SNGS.RTS>, touted by many analysts as one of
the most promising oil company stocks, slipped to $0.1075 from
$0.1115, while LUKoil <LKOH.RTS> fell to $7.05 from $7.49.
"In my view, the main reason is the same as before in that
banks are afraid of a devaluation," said Andrei Galperin, head
of the domestic investors' department at Rinaco Plus.
"It is clear that the world markets are now looking
downwards...people are afraid of holding roubles," he added.
However, Galkin said it was possible that the fall in share
prices would halt by the time the New York market opens.
"At these levels, you cannot sell a lot. The liquidity of
the market is falling. Therefore, perhaps we shall see a brief
bounce, then stabilisation until New York comes in," he said.
((Moscow Newsroom, +7095 941-8520 email@example.com))
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