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Russian markets up despite shock
MOSCOW, Russia (CNN) -- Investors welcomed moves by the Kremlin to reassure the markets that its fight with oil giant Yukos was not an attack on economic reform. Russia's benchmark stock index, the RTS, rose 1.5 percent to 503.89 points but Yukos stock fell 3.1 percent to $41.61 in early London trading, amid continued concerns among some international investors. Russian President Vladimir Putin rushed to appoint Dmitry Medvedev of gas company Gazprom as his new chief of staff to replace Alexander Voloshin, who submitted his resignation after the arrest of Yukos Chief Executive Mikhail Khodorkovsky. (Full story) On Thursday, Yukos shares dived 12 percent after Russian prosecutors seized 44 percent of the oil giant it says Khodorkovsky owns, in a bid to stop the money leaving the country. But investors feared Kremlin "hawks'' might try to reassert state control over the economy. In a move to reassure international investors that Russia was not moving back to Stalinist methods and destroying all prospects of business -- as many newspaper said Friday -- Putin met with top banking executives from across the world Thursday. Stephan Newhouse, the chairman of U.S. banking giant Morgan Stanley and officials from Citigroup, UBS and ABN Amro were among the 16 financial intuitions invited to the meeting. Yukos shares traded on the RTS in Moscow rose 7.5 percent to $11.50 Friday morning but the stocks is still down about 20 percent on the week, wiping $10 billion of the company's value. The rouble-denominated MICEX exchange share index climbed 3.5 percent to 464.41. The ruble opened weaker against the dollar but recovered slightly after the stock market opened, although the Russian currency remained below the previous day's close. But debt rating agency Moody's shrugged off the arrest and reaffirmed its recent decision to raise its rating for Russia to investment grade. "Current events -- whatever their outcome -- will undermine neither the sound economic fundamentals of the country nor the government's considerable willingness and ability to service its debt." Khodorkovsky was arrested Saturday on charges of fraud and tax evasion totaling more than $1 billion. He remains in jail. Prosecutors said that according to Russian law, they have the right to seize property owned by people accused of crimes. But public relations agents for Khodorkovsky, said the move was a "gross violation of the law" and that the arrest was on "trumped up" charges. They add that the shares do not belong to him but rather international investors. If Khodorkovsky is convicted he could lose his assets to the state. This could be interpreted as nationalization, which is a highly charged issue in Russia. Putin has promised the Khodorkovsky case will not be used to reopen controversial privatizations of the 1990s in order to re-nationalize Russian companies. But the political situation is being cited by analysts as the reason for his detention. He has given large amounts of money to political opposition figures.
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