👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

UPDATE 1-Russia market ignores Chechen threat, up 0.9 pct

Published 08/21/2009, 08:42 AM
Updated 08/21/2009, 08:45 AM
TTEF
-
CL
-

* Russia outperforms emerging shares on day despite threats

* Markets focus on cost of hydro dam repairs

* Chechen violence cause for long-term discount on Russia (Adds strategist quotes, Russia discount, updates prices)

MOSCOW, Aug 21 (Reuters) - Russian markets, long resilient to violence on the country's southern flank, shrugged off claims on a rebel website that Chechen fighters had declared "economic war", as shares in key infrastructure companies rose.

The rouble did not react to Friday's claim, and pared losses to stand around 4 kopecks below Thursday's close against a basket of currencies.

The MICEX share index, trading little changed for most of the day, was up 0.9 percent at 1108 GMT, compared to 0.32 percent for broader emerging markets

Benchmark Brent crude oil prices gained 77 cents.

A Chechen rebel website declared "economic war" on Russia and claimed responsibility for an accident at a Siberian hydro dam that killed at least 30 people and a bomb attack on the Interior Ministry of a neighbouring southern republic which killed at least 20.

The site said the group would attack oil and gas infrastructure as well as power stations and electricity lines.

"At this point it isn't a major concern for investors," Uralsib Chief Strategist Chris Weafer said.

"Most investors will see this as an opportunistic threat by the group on the back of one of these accidents and an attempt to raise general fears."

Five blasts shook the Chechen capital Grozny hours after the claim of responsibility.

Traders dismissed the claim that Chechens had attacked the Sayano-Shushenskaya hydro dam, a major asset of RusHydro, a popular company and aspiring blue chip stock.

"This is total nonsense, because nobody takes responsibility a week after a terrorist act," Otkrytiye trader Alexander Pankov said.

"Of course it wouldn't be too difficult to organise a diversion at one of these high security sites ... the issue is why would the rebels want to do it? Blowing up a hydropower dam isn't realistic."

Key infrastructure companies were steady to higher. Pipeline operator Transneft was up 1.74 percent, while the Federal Grid Co was unchanged at 1108.

RusHydro shares, which fell more than 15 percent in the days after the Monday blast, gained about 2.7 percent on Friday.

"Investors want to understand the stages in which the station will return to work, the economics of the project, and changes in the investment programme," Citi's Anatoly Darakov said.

While markets normally manage to stay calm in the face of episodic violence and threats, unrest in Russia's south -- and the accompanying headlines in the global financial press -- puts long-term pressure on Russian assets.

Russian shares trade at a 17 percent discount to the emerging markets median on a 2009 price/earnings basis, according to Citi data. "At the same time one of the reasons why investors have a generally wary stance toward Russia, why Russia has a discount to emerging markets, is that investors are aware there is always the risk of an escalation in events in places like Ingushetia and Dagestan and other places in the south," Weafer said.

"It is just one of those factors that are always there in the Russia story, one of the reasons why investors do have this sort of stance, because of the threat an escalation is never far away." (Reporting by Zlata Garasyuta and Olga Popova; writing by Melissa Akin; Editing by Rupert Winchester)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.