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Strategies & Market Trends : Countries

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From: Sam Citron9/17/2008 12:39:30 PM
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Russian Exchanges Halt Trading for Second Day; VTB Declines
By William Mauldin

Sept. 17 (Bloomberg) -- Russia's Micex Stock Exchange and RTS Exchange halted trading for a second day as the Finance Ministry rushed to provide loans to the country's banking system and a Moscow brokerage sought to sell a stake to meet its financial commitments.

The Micex stopped trading indefinitely at 12:10 p.m. The settlement prices for stocks have been calculated based on the average price of trading in the last 30 minutes before the market's halt, while the index's closing level is yet to be calculated, spokesman Alexei Gerasyuk said by phone. Officials are now meeting to decide when trading may be resumed, he said.

The ruble-denominated Micex Index slid 3.1 percent to 853.93 in Moscow at the time trading was suspended, after earlier rising as much as 7.6 percent and dropping as much as 10 percent. The benchmark plunged 17 percent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001.

The FTSE Russia IOB Index, a measure of Russian global depositary receipts trading in London, fell 3.7 percent. The dollar-denominated RTS Index today fell 6.4 percent to 1,058.84, when trading was halted.

The Finance Ministry today pledged to lend 1.13 trillion rubles ($44 billion) for more than three months to boost liquidity in the banking system. The Mosprime rate, a measure of overnight interbank lending rates in Russia, jumped to a record high of 11.1 percent today from 5.7 percent a month earlier.

``The bond market remains effectively closed and banks are reluctant to lend to one another
,'' said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London. ``The problems experienced by KIT Finance have heightened counterparty risk and reduced liquidity further.''

KIT Finance

KIT Finance, a Russian brokerage, today said it is in talks with investors to sell a stake after failing to meet some financial obligations related to repurchase agreements.

``Every day Russia falls due to people not being able to meet margin calls,'' said Marina Akopian manager of the Hexam EMEA Absolute Return Fund in London. ``If people can stomach short-term volatility, they will be handsomely rewarded.''

Sberbank, Russia's biggest bank, dropped 5.81 rubles, or 17 percent, to 28.84 rubles. VTB, the second-biggest bank, sank 0.45 kopek, or 14 percent, to 2.72 kopeks, a record low. A kopek is one hundredth of a ruble.

Highland Gold Mining Ltd., the gold producer part-owned by billionaire Roman Abramovich, climbed 16.75 pence, or 62 percent, to 44 pence as of 4:33 p.m. in London, the biggest jump since May in London trading, after appointing a new chief executive officer.

The mining company selected Valery Oif, 42, from Abramovich's Millhouse Moscow holding company, as its chief.

RusHydro, VolgaTelecom

``Millhouse is tightening its grip over Highland and, having replaced all top financial positions in the company, now decided to replace CEO with a person whom Abramovich personally trusts,'' said Mikhail Stiskin, a Moscow-based analyst with Troika Dialog who has a ``buy'' recommendation on the shares.

Shares of Russia's OAO RusHydro, OAO VolgaTelecom, and OAO Rostelecom are among those whose trading was suspended from the opening of the Micex Stock Exchange after they fell more than 10 percent yesterday.

RusHydro, the world's biggest publicly traded power producer, lost 25 percent to 0.75 rubles on the Micex yesterday. VolgaTelecom, the fixed-line phone network in Russia's Volga River region, plunged 28 percent to 37.06 rubles, while Rostelecom, the country's largest long-distance phone company, slid 14 percent to 233.36 rubles.
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