MOSCOW, September 4 (RIA Novosti) — On Wednesday, the Moscow Interbank Currency Exchange stated that the MICEX index had climbed 3.49% and closed at 1449.29 points, while the RTS index rose 5.2% to 1,239.23 points, reflecting hopes for peace in Ukraine.
Russian stocks made significant gains on Wednesday. Although the market only rose slightly early in the day, its upward movement strongly intensified at about 12:00 Moscow time, after the Ukrainian presidency issued a statement that Petro Poroshenko and Russian President Vladimir Putin had spoken on the phone and agreed to a permanent ceasefire in Donbas.
Despite the Ukrainian position being slightly reworked later, the main Russian stock indexes rose in the middle of the trading session. Specifically, Kiev clarified that the Russian and Ukrainian presidents had not discussed a complete ceasefire, but only certain measures that would facilitate a peace agreement.
However, by late afternoon, stocks got a fresh impetus to rise after Russian President Putin's seven-step plan to resolve the conflict in the southern-east of Ukraine was unveiled.
In particular, Russian President Putin said that in order to cease the bloodshed in Ukraine, the parties to the conflict must put an end to their active military operations.
The militia of the self-proclaimed Donetsk People’s Republic announced that they were ready to stop fighting if Kiev removed its troops from populated areas.
Later in the evening, the the first signs of a ceasefire became visible. Specifically, the speaker of the Ukrainian National Security and Defense Council Andrei Lysenko said that military activity decreased in the area of the offensive in the east of the country.
Performance in the corporate segment was marked by the news that a subsidiary of AFK Sistema (down 4%), Sistema-Invest, had been banned from writing off shares of Bashkirskaya Eectrosetevaya Kompaniya, which is owned by AFK.
Shares of PIK (which were up 9%) were among the stocks that made the best gains against a backdrop of strong corporate results. The company plans to double its current net profit by 2016.
The key shares in the indexes, which were the most liquid stocks, climbed 2.8-6.4% in a cohesive way, reflecting a decline in political risk. However, shares that stood to benefit from the induction of new sanctions sold best, the traders report.
Forecast and recommendations
Meanwhile, investors are still waiting for the announcement of the EU’s new sanctions along with upcoming NATO decisions, said Yulia Frumkina from Veles Capital.
"In this situation, tomorrow's Russian stocks may repeat Wednesday’s positive trends, but we cannot rule out the likelihood of a correctional fall later," she added.
From a technical standpoint, RTS Index futures should have been bought at a short date at almost that pace, but no one expected they would be bought with such enthusiasm, said Nikolai Podlevskikh from Zerich Capital Management.
"According to today’s market jump, the end of the week will be dynamic. Until the weekend, investors will be very hectic. The market is anxiously anticipating the discussion of the acute problems in Ukraine. The NATO summit, the EU summit, the discussion of new sanctions against Russia, talks in Minsk on resolving the crisis in Donbas, and the discussion on the South Stream pipeline, OPAL throughput and gas supplies in Ukraine are ahead," he added.
