August 27 (Finam) -- Massive sell-offs continued on the Russian stock market Tuesday. Downbeat sentiment in early trading and expectations that Russia will recognize South Ossetia and Abkhazia as independent states spooked investors. However, shortly after the Russian President's speech and the recognition of the Caucasian republics as independent, stock indices managed to win back some losses that topped 6% at the time, with the RTS Index sliding 4.16% and the MICEX Index pulling back 2.09%.
Once again, domestic bank names led the decliners under ongoing pressure from problems faced by the American financial sector, as Sberbank dove 6.8% and Bank Vozrozhdenie plunged 8%. A jump in crude contracts lent some support to domestic O&G plays that even managed to win back losses exceeding 5%, with Gazprom inching up 0.4%, Rosneft ending 0.6% higher and Lukoil off 0.6%. Steelmakers were hit with sell-offs against the backdrop of the overall market trend, as NLMK gave up 4.4%, Severstal dipped 2.7% and MMK plummeted 6.4%. Norilsk Nickel, down 1.5%, still enjoys support from the company's share buyback decision.
American stock indices were highly volatile Tuesday, but the Dow and S&P 500 managed to close out in positive territory. The consumer confidence index, released yesterday, came in better than expected. O&G stories led the advancers on the heels of surging oil futures. Asian markets are mixed this morning. Crude futures are rising on fears a storm in the Gulf of Mexico could disruption oil production.
Wednesday's morning news flow is ambivalent, although we expect domestic trading to be highly volatile, at least, at the open. The bullish close of American exchanges and a jump in oil contracts could prop up domestic liquid names, i.e., oil plays. However, yesterday's recognition by the Russian President of South Ossetia and Abkhazia as independent states could ratchet up tension in Russia's relations with the West. Against this backdrop foreign investors could continue to bail out of Russian stocks, shrugging off the fundamental appeal of the current stock prices. |
