Russian stocks plummet as oil price falls, players distrust regulators

MOSCOW, Mar 18 (PRIME) – The Russian stocks went into a tailspin on Wednesday pummeled by a slump in oil prices and distrust of foreign markets in the promises of regulators to pump money into the economies, analysts said.

The MOEX Russia Index fell 5.04% to 2,112.64 and the RTS decreased 10.96% to 832.26.

“Oil remains the major driver for the general contraction of the market…We don’t rule out the possibility of it falling to U.S. $25 until the end of the week and to $20 in two weeks,” Valery Yemelyanov, analyst at investment company Freedom Finance, said.

The contraction of oil prices resulted in ruble devaluation, Yemelyanov said.

Yelena Kozhukhova, analyst at Veles Capital, said that the Brent and the WTI oil prices hit their lowest since 2003 and 2002, respectively. The markets were prisoners of expectations that supply would be higher while demand would be lower during the upcoming global economic recession, she said.

Andrei Kochetkov, senior analyst at Otkritie Broker, said that problems with liquidity in the U.S. dollar system continue exerting pressure on the global market.

“The U.K. plans to spend 350 billion British pounds to support the economy. The U.S. is preparing bills that encompass spending of $850 billion and more. We are left to guess who is going to finance these debts. The regulators who again launch quantitative easing programs look like the candidates for that, but the markets don’t believe in the efficiency of these measures,” Kochetkov said.

Continuous contraction of the stock markets led to problems with liquidity, and these problems won’t be solved quickly. Many economists think that $1.5–2 billion of quantitative easing would be necessary to save the markets, he said.

Yemelyanov also said that market players express interest in gold producers, so Polymetal International and Polyus gained 1.32% to 1,008.60 rubles and 3.23% to 8,383.50 rubles, respectively as the oil price climbed above $1,500 per ounce. Gold earlier suffered from a sale of assets, while now it is regaining the lost ground, he said.

Kochetkov said that shares of national flagship carrier Aeroflot again were among the loss leaders falling 12.20% to 56.70 rubles, as the company almost lost its field of work for an uncertain period of time, though the same could be said about all air carriers in the world.

Below are the MOEX Russia Index’ five most active stocks on Wednesday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-5.29	174.27	27.438
Gazprom	-0.40	166.34	17.613
Lukoil	-9.94	3754.00	14.192
Norilsk Nickel	-9.78	15500.00	9.639
Magnit	+0.52	2780.00	5.182

(73.8896 rubles – U.S. $1)

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