Tuesday, September 19, 2000

Moscow: Oil Shortage Cuts Into Equities

By Igor Semenenko

THE MOSCOW TIMES

The RTS index was down 7.5 percent on the week to 210.54 even though oil prices held firm in London. The Brent futures edged up 3.66 percent on the week to close at $33.98 Friday f a margin below 10-year highs f despite OPEC's decision to raise production by 800,000 barrels to 26.2 million barrels per day on Oct. 1. Stock markets around the globe are chilly due to fears of inflation and low corporate earnings as a result of high oil prices.

Iraq added fuel to the fire by accusing neighboring Kuwait of stealing its crude, exacerbating fears that the oil market will remain a bull gathering despite higher production volumes by the Organization of Petroleum Exporting Countries.

The euro added to concerns about lower corporate earnings of multinational companies, hitting a fresh low of $0.8510 last week.

The Dow Jones dropped 2.61 percent on the week to 10,927, diving below 11,000 for the first time since Aug.10. Tech-stud NASDAQ shed 3.6 percent and the FTSE 100 shrunk 2.78 percent to 6,417.3.

"There is fear of a correction in the stock market all around the globe," said Yevgeny Morozov, head of domestic sales at Renaissance Capital investment bank. "We will remain tied to the U.S. stocks and oil price dynamics." Bellwether Unified Energy Systems was down 9.99 percent to 14.5 cents a share, Surgutneftegaz shed 11.64 percent to 31.5 cents and LUKoil slumped 7 percent to $14.35. Rostelecom was a big loser, declining 11.65 percent to $1.82.

Two cellular operators joined the underperformers overseas after the Communications Ministry said they would have to share their 900 Mhz channels with Sonic Duo, a joint venture between Sonera and Moscow Telegraph. Though the government pulled back by the end of the week, Vimpelcom slumped 19.9 percent to $20.88 per ADS and MTS dropped 5.1 percent to $25.5.

Some brokers did not lose hope. "RTS could keep growing until the middle of October because the fundamentals are solid," said Vladimir Detinich, head of research with Olma brokerage. "But after that, we should adjust for global sentiments."

Among prospective events that can influence the market are the government's play with Vimpelcom and MTS, the announcement of ONACO privatization results due Tuesday and the 2001 budget discussion slated for next week.

http://www.moscowtimes.ru/19-Sep-2000/stories/story23.html

-- Carl Jenkins (Somewherepress@aol.com), September 19, 2000