Russia's stock market, as frozen as a Siberian winter until recently, closed sharply higher on February 19, completing a recovery of about 26 percent since the beginning of February in a strong performance that baffled traders who saw little reason for such optimism.
"It keeps on trotting along", observed Gary Kinsey of the Aton Capital trading house. "Today's rally followed a comment by the Templeton Fund that the Russian market should be one of the best performers of the year".
The Fund, known for its emerging-markets trailblazing feats, earlier this week put the Moscow market on its "to buy" list for the next 12-month forecast period.
The main Russian Trading System index rallied 5.5 percent on February 19 to close at 70.22.
Friday's volume stood at $11.2 million, which, while still modest, represents a 10-fold improvement on daily floor activity since last August's financial crisis.
"It's hard to say that the market is reacting to any particular piece of news simply because it's so illiquid," said David Kuenzi of the Creditanstalt Investment Bank.
"There is definitely a lot of room on the up side," Kuenzi added.
Russia's market has been comatose since last August, when the government devalued the ruble and defaulted on its domestic debt, known as GKOs.
Once fleetingly the world's top performer, the stock market collapsed by more than 80 percent last year. But traders say that investors are once again weighing the possibilities in Russia.
"Some fund managers are making a few buys and are again looking into Russia," Kuenzi said.
One of the few driving forces traders currently point to are Russia's ongoing debt restructuring negotiations with creditors, including the Paris and London Clubs as well as the International Monetary Fund.
"Right now, any piece of good news on debt restructuring pushes back the prospect of Eurobond default, because that default stands out as the one catastrophe that can really strike within the approaching months," Kuenzi said.
"Anything that diminishes that risk moves the market," he added.
Earlier this month, traders said, the market also responded well to the prospect of a GKO restructuring deal that could enable investors to channel proceeds from the suspended bond market into stocks. This would promise a flood of new money for the market though traders say liquidity would remain limited.
"There are so many variables out there," Kuenzi said, "that it's really a mixed story."