Bloomberg News

JPMorgan Sees Russia Protests as Market ‘Drag’ Through March

December 12, 2011

Dec. 12 (Bloomberg) -- Russian political risk sparked by ballot-rigging allegations in parliamentary elections may remain “repellent” for stocks for months to come, even after nationwide protests ended peacefully, JPMorgan Chase & Co. said.

“Large-scale political protests have taken their toll on the market, with Russia massively underperforming global emerging market peers in the past week,” said Alex Kantarovich, a strategist at JPMorgan in Moscow, in an e-mailed note today.

President Dmitry Medvedev said yesterday he ordered an investigation into allegations of electoral fraud in the Dec. 4 elections to parliament, which was won by the dominant United Russia party that he and Prime Minister Vladimir Putin promoted. About 25,000 people gathered in near-freezing weather in central Moscow the day before to protest the results of elections, with tens of thousands more doing the same in St. Petersburg and other major cities, according to police.

The Micex Index rallied today, rising 1.5 percent, the most this month, to 1,416.49 at 12:49 p.m., after nationwide protests Dec. 10 concluded peacefully. That measure tumbled 7.3 percent last week, the most in almost three months, as earlier protests led to the detention of hundreds of activists.

The most likely outcome of the dissent is for protests to continue sporadically into the first quarter of 2012, yet fail to broaden, JPMorgan said.

The most likely scenario is that Putin’s plan to return to the Kremlin in the March vote for president will go according to plan and stocks will “experience a drag until then,” Kantarovich said.

--Editors: Torrey Clark, Alex Nicholson.

To contact the editor responsible for this story: Brad Cook at

To contact the editor responsible for this story: Hellmuth Tromm at

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