Moody's Russia upgrade unlikely to change stock market situation - experts

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MOSCOW, October 26 (RIA Novosti) - Moody's upgrade for Russia's foreign-currency country rating will not turn around the situation on the Russian stock market, experts with Russian investment companies said Wednesday.

The international rating agency said Wednesday that it had raised Russia's foreign-currency country rating for bonds and the foreign- and local-currency rating of Russian government bonds from Baa3 to Baa2, with a stable outlook.

The ratings reflect a number of factors, including a very rapid and significant buildup in the government's foreign-currency and oil stabilization fund reserves, the agency said.

Moody's also raised the ratings of Finance Ministry tranches V, VI and VII to Baa2, along with the rating for the foreign-currency bank deposit, with a stable outlook. The country guideline for local currency obligations remains at A1.

Experts believe the upgrade will do nothing to improve the market situation since it was expected and taken into account for stock prices. They are confident that against the background of heavy overselling of Russian stocks, there will not be a new breakthrough, with the RTS index, the main indicator of the Russian stock market, unlikely to break back through the record 1000-point level.

Moody's is not the first agency to have upgraded Russia's rating. At the beginning of August, international ratings agency Fitch raised Russia's long-term sovereign rating for foreign and national currencies one notch to BBB, with a stable outlook, and Finance Ministry tranches V and VIII two notches, from BB+ to BBB.

The stock market reacted only sluggishly to Moody's upgrade, investment analyst Oleg Dushin said Wednesday.

Furthermore, Tsentinvest Securities Vice President Roman Andreyev said some players had expected a two-notch raise so the news was disappointing.

He said the prospect of higher interest rates in the United States could cause Western investors to pull out of Russia even despite the fact that the positive outlook for oil price growth was conducive to further strengthening of the Russian market.

Experts agree that the RTS index will barely break back through the 1000 points before the end of the year, expecting it to close at about 920 points.

At 12:36 p.m. Moscow time, the RTS index was at 910.78 points, with blue chips up 1% and RTS classic market trading at about $10 million.

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