Investors puzzled by Russian market surge

Speculation in the Russian press that Sberbank entered the equities market on Tuesday as a major buyer has attracted the attention of analysts. With the Russian stocks as much as 20 per cent off, they see it as a good time to buy in. But there's also comm

The Russian markets have been taking their lead from global developments since the start of the year, with movements up or down generally reflecting international investor sentiment on the day.

However Tuesday saw the RTS and Micex jump without the international lead. Reports in Kommersant suggested Sberbank had entered the equities market as a major buyer.

Speaking on Wednesday, Alfa Bank strategist Erik DePoy noted market interest in the reported move:

“I think investors right now have a good selection of Russian stocks at cheep levels. For investors that have cash it's a great buying opportunity. What we saw yesterday apparently is Sberbank – the country's largest bank – putting some money into the market. Sberbank is not known as a player on the equity market. So definitely it got people's attention,” he said.

But the possibility of major banks entering the market is also attracting comment, suggesting that the government is seeking to smooth out any instability ahead of the presidential election, against a volatile global background.

“If I were a CEO of Sberbank I would consult with government bodies on possibly every sizable action because a sizable action by Sberbank would have a lot of influence on the Russian financial market as a whole,” believes Aleksandr Golovtsov, Director Research at Uralsib Asset Management.

He added that in this particular case the move does not seem to be politically motivated.

“As far as I can see the temptation to buy stocks at depressed levels probably prevailed in this purchase over some possible political implications. It more looks like a wide-spread buy in of all the spectrum of liquid stocks then support of any political names,” he said.

If confirmed, the buy in could have a significant effect. But whether its part of a longer term strategy on the part of the banks concerned or a short-term volatility minimization tactic by their major shareholder, the move carries a number of implications. And market watchers will be looking out for any further signs of the banks buying in over coming weeks.