Support The Moscow Times!

Russian Shares Rise as Fears of Russia Invading Ukraine Ebb

A Russian convoy of trucks carrying humanitarian aid for Ukraine, behind a police escort, stops along a road near the city of Yelets.

Russian shares rose strongly on Wednesday, reflecting a recovery in global risk appetite and investors' hopes that international tensions over Ukraine would ease despite confusion about a Russian aid convoy.

The dollar-denominated RTS index closed up 1.8 percent at 1,220 points. Its ruble-based peer MICEX was also 1.8 percent higher at 1,398 points.

"The local market is rising stronger than could be expected given the external backdrop," Nord Capital analyst Vitaly Manzhos commented in a note. "Probably the reason for the rise is the current weakening influence of the geopolitical factor [Ukraine]."

Fears that Russian military intervention in Ukraine may be imminent have receded, although there was confusion over the future of a Russian aid convoy that is bound for eastern Ukraine. Ukraine says the move is designed to fan a pro-Russian rebellion.

Kiev declared that the convoy would not be allowed to pass, but a presidential spokesman later suggested a compromise might be found, bringing it under the control of the International Committee of the Red Cross, or ICRC.

Heavy fighting in eastern Ukraine between government forces and pro-Russian separatists is also continuing, with a rapidly rising death toll as fighting escalates.

Russian stocks were helped by a general rally in global risk appetite, with the MSCI emerging markets index up 0.8 percent and Germany's DAX stock index up 1 percent.

Many analysts were surprised by the strength of positive sentiment toward Russian stocks. BCS Express analyst Ivan Kopeikin said that external negative factors, such as weak euro zone economic data and falling oil prices, pointed to the market falling in the short term.

On Thursday the Brent oil price hit a 13-month low, trading in the region of $103 a barrel.

The market also shrugged off poor first half results published by gas giant Gazprom under Russian accounting standards, or RAS, which showed a 38 percent fall in net income, were analysts said was negative for investors as it reduced the likelihood of 2014 dividends.

Gazprom explained the fall in profits in part with reference to provisions against "doubtful debts" — believed by analysts to refer to debts owed by Ukraine's Naftogaz.

Despite its disappointing RAS results — seen as a guide to more reliable results under International Financial Accounting standards — Gazprom was up 2.3 percent, reflecting the demand for liquid shares against the backdrop of the general improvement in sentiment.

"Today we had not bad volumes of purchases for Gazprom. True, there was just as much for Sberbank," said Andrei Yarnikh, equity salesman at UBS.

The ruble also rallied, rising 0.35 percent against the dollar to 36.05, and 0.18 percent to 48.26 versus the euro. It was 0.31 percent stronger at 41.53 against the dollar-euro basket.

Sign up for our free weekly newsletter

Our weekly newsletter contains a hand-picked selection of news, features, analysiss and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview
Subscribers agree to the Privacy Policy

A Message from The Moscow Times:

Dear readers,

We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."

These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.

We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.

By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.

Once
Monthly
Annual
Continue
paiment methods
Not ready to support today?
Remind me later.

Read more