The Prokhorov bounce: Norilsk Nickel and Polyus Gold prices recover

The Prokhorov bounce: Norilsk Nickel and Polyus Gold prices recover

Mikhail Prokhorov returned to his office at Norilsk Nickel headquarters on Monday, his spokesman proclaiming that his four-day detention by the French police on suspicion of pimping was a “regrettable misunderstanding”.

While that may very well be the case for the French, what Russian rivals of Prokhorov will now understand about the scandal could be regrettable in quite another way.

The leading Moscow media have reported in great detail on the judicial affair of Prokhorov and a baker’s dozen of his comely Russian friends, while Moscow investment brokerages have remained stonily silent. Not that they weren’t interested in the outcome of the affair. According to a precious metals banker, “a downgrade based on the fact that the CEO and co-largest shareholder [of Norilsk Nickel and Polyus Gold] has been framed in a European jurisdiction behaving exactly as he does week-in week-out is not likely. It could not happen to a nicer guy. On first examination this is an amusing incident to say the least.” The banker went to say he is watching “”to see if this gets material further coverage in the Russian press as indicative as to whether [Prokhorov] still has enemies at home.”

In its first day of trading since Prokhorov’s release, the Moscow stock market restored almost all of the capital value which had been lost last week, while Prokhorov, two other Norilsk Nickel executives, and 23 others were incarcerated at the Hotel de Police in Lyon. Norilsk Nickel –which Prokhorov owns with Vladimir Potanin — rose 6.8% on the day to reach a market cap of $29.5 billion. On January 9, the day of Prokhorov’s detention, the company’s market cap had been $29.9 billion. It then lost $2.3 billion to sink to $27.6 billion.

Polyus Gold, also co-owned with Potanin, started the alpine holiday week at a market cap of $9.4 billion. It then lost $800 million to $8.6 billion. On Monday [January 15], the Polyus share price recovered 1.8%, and the market value moved up to $8.8 billion.

This ejaculation in Russian stock value was prodded, according to most brokerages, by global commodity prices. Oil, which drives most of the Russian stock market’s tumescence, gained; at least, for the two Russian marker prices, Urals and Siberian Light. Nickel, platinum, palladium and copper were also up. Gold went down, and this may have curtailed the enthusiasm for Polyus.

Prokhorov was released by the Lyon prosecutor on Friday without the filing of any charges. He was warned, however, that he is regarded as a material witness in an ongoing investigation, and may be summoned back for questioning. That envoi makes near-certain Prokhorov will not cross the French border. The presumption of innocence, accorded him under the French and European Union constitutions, may not protect from future embarrassments, at least untril the Lyon judiciary formally winds up its inquiry, and finalizes its dossier.

One Russian business newspaper, Kommersant, has suggested that Prokhorov has been considering his exit from the CEO position at Norilsk Nickel by the spring of this year. The newspaper is currently owned by Alisher Usmanov, a base metals magnate, with ties to Gazprom and an obligation to please the Kremlin. To date, there is no sign that, apart from standard consular support to the detainees in Lyon, the Russian government did anything to rescue Prokhorov from his predicament.

For support of the idea that Prokhorov may leave his post, Kommersant cited sources reportedly at Almazjuvelirexport, the state marketer of platinum group metals, and Alrosa, the state owned diamond miner. Both have reason to look for Kremlin support for a buy-out of both Prokhorov and Potanin.

Kommersant also published an unusual compilation of comments on Prokhorov’s trouble. An editorial in a newspaper in the Krasnoyarsk region, where Norilsk Nickel is the largest taxpayer, and where Prokhorov’s predecessor as CEO is currently the governor, reportedly declared that “half of the budget of the territory depends on [Prokhorov’s] health, high-quality rest, and moral condition.” It hinted that even if there were no anti-monopoly limits on Prokhorov to procure his girlfriends from Krasnoyarsk, it was “‘unfair” of him to spend the money outside the region.

Lyubov Sliska, the highest ranking woman in the State Duma, where she is first vice-speaker, is cited as commenting she would not wish Prokhorov as a husband ”even for the daughter of an enemy.” By contrast, Ella Pamfilova, a well-known figure in the Russian women’s movement, is quoted as saying Prokhorov has become “an even more desirable groom”. She added that ”if there were no grounds to detain him for a long time, he should bring an action against the French police; for reputation is necessary to struggle. ”

Source: Mineweb.com

Share this post