The Market Mover

If you are investing in Russia, don't worry about a company's fundamentals: read the President's lips. Last Thursday, shares of the oil giant Yukos were at a 30-month low and were dragging the rest of the Russian stock market down with them. The market feared that the Yukos affair was heading for the worst possible end — bankruptcy.

But Thursday afternoon, Vladimir Putin told journalists he had no interest in seeing Yukos go bankrupt, and in less than two hours Yukos shares jumped by 35% and the market finished 10% up in record trading. Yukos' share price rose again Friday by almost 4%. Putin was careful to stress that he was expressing his own feelings and the courts were, of course, independent. The market, however, clearly feels that the President gets what he wants.

Despite this brief burst of optimism, Yukos may still be doomed. Its founder Mikhail Khodorkovsky and a top shareholder, Platon Lebedev, are on trial for fraud and tax evasion. Yukos has been hit with a demand for $3.4 billion in back taxes. The stock surge won't alter the trial's outcome. One Khodorkovsky attorney, Robert Amsterdam, predicted his client would be convicted. The company has set up a hotline to field questions, but only Putin has the answers.