Russian stocks rise on Putin victory

Russian stocks were higher Monday after Vladimir Putin's sweeping victory in Sunday's presidential elections, with investors focusing on whether the win would bring a quick return to political stability. Although widely expected to win by a large margin-—his nearest challenger, Communist Party leader Gennady Zyuganov, finished with less than 20% of the vote—Mr. Putin's win nevertheless drew charges of vote-rigging from the opposition, despite a massive rollout of election observers and webcams at polling booths. "The market will likely take comfort from the win as a sign of continuing stability, but will now focus on whether Putin will deliver on his economic and political promises," said Ivan Tchakarov, chief economist at Renaissance Capital. The benchmark Micex stock index opened higher, and was recently up around 0.4% at 1614.08, while the ruble was weaker by 0.2% versus the dollar at 29.33. Although all the opposition candidates complained of irregularities during the vote and the preceding campaign, Mr. Zyuganov was the only one who refused to recognize the election result as legitimate. Market players said there was room for a short-term rally in stocks and the ruble, as big foreign investors who quit the Russian market in the wake of December's protests come in off the sidelines. "There are many sizable funds that wanted to hear the election results before jumping back in," said Konstantin Nemnov, who manages a $1 billion fixed-income fund at BNP Paribas. "There's a large discount here to other emerging markets, but the strength of any short-term rally will depend mainly on what kind of news we get from abroad," in terms of the global economic backdrop. The opposition has already planned a mass protest over the election results for 3 p.m. GMT in central Moscow Monday. Mr. Putin's lowest poll result by far was in the capital itself, where he garnered only 48.7% of the vote. By contrast, in the republic of Chechnya, where Mr. Putin put down long-running unrest with extensive military force in his first two terms, he received over 99.7% of the vote, based on a 99.6% turnout, according to official figures. The Kremlin moved quickly to make apparently conciliatory gestures to the opposition in the wake of the poll, with outgoing President Dmitry Medvedev instructing a review of the conviction of jailed tycoon Mikhail Khodorkovsky and of the decision not to register the liberal opposition party PARNAS. The man charged with reviewing the legality of Mr. Khodorkovsky's conviction is Chief Prosecutor Yuri Chaika, who was Justice Minister at the time of Mr. Khodorkovsky's first trial in 2004 and supervised the prosecution of Mr. Khodorkovsky at his second trial in 2010. Mr. Putin's spokesman Dmitry Peskov had earlier made clear in a radio interview, however, that "there will be no kind of revolutions and, much less, paroxysms of liberalism," but rather only gradual change in the political system. Investors, however, said the system would have to change if Russia hoped to stem its massive capital flight and keep its most skilled workers from leaving. "There will have to be significant policy change in the direction of truly fair elections, truly independent judiciary and a true fight with corruption," said Jochen Wermuth, chief investment officer of Wermuth Asset management, adding that many investors are likely to stand on the sidelines until they see which direction Mr. Putin's policies take. "Trust will have to be rebuilt on the basis of real actions, otherwise the exodus of people and capital will continue." Mr. Putin's own first remarks, at a rally in central Moscow and then in a televised "thank you" to the workers of the Uralvagonzavod tank factory in the Urals, made no reference to the need for any reform, and took a swipe at the largely middle-class protesters who had demonstrated against him in Moscow. "What you have done—you, who stand at the assembly line, who do real, concrete work—shows that your intellectual level is twice as high as those who think God rests on them," Mr. Putin said.