Dealers said some foreign investors were considering whether to reduce their exposure to Russia.
"The market is still very quiet after the New Year and Christmas holidays, but some foreign investors have already suggested they may reposition their portfolios and reduce their exposure to Russia," said Victor Huaco from AIOC-Capital. "The general mood is to treat Russia very cautiously."
"The question of political stability was not central last year, but now it is at the top of the agenda," said Sergei Glushchenko, a trader from Grant Financial Center.
"It is frightening serious foreign investors away. They need stability, a developed market infrastructure and easy access to information. Low share prices are not enough for them."
Komineft shares were unchanged from late 1994 rates at $5 to $7. Tomskneft stocks were flat at $6 to $7.50. Offer prices for Irkutskenergo slipped to about $3.40 from $4.50 and bids edged down to $2.80 from $3.00. Chernogorneft was stable at about $65.
Most Russian shares are traded in over-the-counter deals between brokers and investors. They were issued in the last two years as part of the country's big privatization drive.
Traders said the stock market was nervous after Vladimir Polevanov, the new head of the Russian state property committee, openly attacked the massive sell-off. Newspapers quoted Polevanov as saying he would insist on the nationalization of "wrongly privatized" industry, especially in the aluminum, energy and military-industrial sectors -- among the most actively traded Russian shares.
"The market reaction to his comments is highly negative," said Huaco. "But we don't understand if it is Polevanov's own point of view or it reflects a new government approach to privatization."
Traders said the falling ruble and rising yields on hard currency operations could divert domestic capital from share trading.
"Rising military costs in Chechnya will speed the ruble's depreciation, making ruble-dollar operations most profitable and leaving no cash for shares," said one trader.
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