State cash gives holiday cheer to Russia shares-trade

MOSCOW, Dec 22 (Reuters) - Russian state bank VEB may launch a last-ditch attempt to improve the Russian stock market’s dismal 2008 performance with stepped-up cash interventions in thin holiday trade, analysts and traders said on Monday.

“VEB is expected to take advantage of quieter international markets to push the price of state enterprise shares higher into the year-end,” Uralsib equity strategist Chris Weafer said in a weekly stock market comment.

VEB, the clearinghouse for hundreds of billions of roubles in government bailout funds, said late last month it had received 115 billion roubles ($4.15 billion) out of a promised 175 billion roubles for direct intervention on the stock market.

Of the funds received, it had spent 85 billion, it said.

The prospect that VEB could spend the remainder by the end of the year encouraged hopes for a year-end rally, which had started to wane with oil prices.

With the benchmark RTS share index .IRTS down 72 percent for the year, most investors, nursing heavy losses, are expected to forgo year-end "window-dressing" and hope for a better 2009.

“I do not expect a Christmas rally,” Metropol trader Mikhail Manasyan said. “The one thing that could happen is that toward the end of the year state structures could become as active as possible in order to raise the value of their investments.”

Russia’s benchmark RTS index rose on Monday despite declines in Europe, adding to expectations that state money would support the market in the final weeks of 2008.

With the FTSEurofirst 300 index .FTEU03 down 1.54 percent and crude futures edging lower, the benchmark RTS .IRTS was up 3 percent at 653.74 at 1145 GMT.

In total, the government has pledged 350 billion roubles in support for stocks and bonds in 2008 and 2009, though some investors and analysts say the pledge is more a “verbal intervention” to stanch losses than a firm intention to spend the whole sum.

With government money propping them up, locally listed shares in Russian state-owned companies have outperformed their London-listed American Depositary Receipts (ADRs).

Local shares in state gas giant Gazprom GAZP.MM, oil company Rosneft ROSN.MM and bank VTB VTBR.MM have all outperformed their London listed ADRs by 2 percent to 3 percent since early October, according to Reuters data.

Weafer said that in addition to Gazprom, Sberbank SBER.MM and VTB VTBR.MM were likely recipients of state support.

In a sign its clients were expecting upside in Gazprom, Troika Dialog brokerage said its clients had been buying short-term call options in the share. ($1=27.73 Rouble) (Reporting by Melissa Akin and Polina Vorobieva; Editing by Sharon Lindores)