08/11/1998 10:24:50 Russian shares tumble early on weak debt markets
By Dmitry Antonov
MOSCOW, Aug 11 (Reuters) - Russian shares fell sharply in
early trade on Tuesday and hovered around their lowest levels in
more than two years as investors took fright from soaring
domestic debt yields and tumbling Asian markets.
"There has been a very substantial drop," said Rinaco Plus
trader Valery Levit, adding that leading shares had touched new
lows on speculative selling. "The situation is extremely grim
for investors, for those who are in stocks and bonds."
At 1015 GMT, Reuters real-time composite index <.RRC1> was
down 11.67 percent at 71.68, while the RTS1-Interfax index
<.IRTS> of leading shares fell 8.38 percent to 110.788, the
lowest since May 1996.
Levit said the more knowing investors had already left the
market. At 1015 GMT, national grid UES <EESR.RTS> slipped to
$0.0880 from $0.1004, LUKoil <LKOH.RTS> fell to $5.00 from $6.24
while Surgutneftegaz <SNGS.RTS> was at $0.0885 from $0.1020.
Dealers said a range of factors was pushing prices down,
including the drops in Russian foreign and domestic debt, a new
slump in oil prices and the continuing crisis on Asian markets.
"The oil price has fallen, our external debt prices are
quite low and the crisis in Asian countries is continuing. This
is the reaction," Aton trader Alexander Bobolev said.
The dealers said it was difficult to predict where the
market would head from here in such thin liquidity.
"We cannot expect a sharp rebound. The market is lacking
liquidity and a sharp drop is possible if there are any further
sell orders," Bobolev said.
However, he said there could be some shortcovering.
"Everything is possible in such an illiquid market," he
Levit said some cautious and selective buying could emerge
at these low levels.
"I would already be buying carefully mid-term or long-term.
At such prices, volatility is completely possible on positive
news and now prices are not bad for those stocks that have hit
new lows," he said.
"Shares are falling strongly and sharply, and it is quite
likely that they can jump on good news," he added.
((Dmitry Antonov, Moscow Newsroom, +7095 941-8520