OAO AvtoVAZ extended gains from yesterday when a false newspaper advertisement about a buyback added as much as 6.89 billion rubles ($224 million) to the value of Russia’s biggest carmaker, part-owned by Renault SA.
AvtoVAZ gained 1.2 percent to 15.54 rubles by 6:35 p.m. in Moscow, reversing losses of 4.2 percent in early trading. The amount of shares traded was about 889,000, equivalent to 1.2 times the three-month average. Yesterday, the stock jumped as much as 24 percent before closing up 2.6 percent at 15.358 rubles.
Russia’s market regulator opened a probe after AvtoVAZ said the announcement touting a stock buyback wasn’t genuine and called it a “provocation.”
“The possibility of share manipulation shouldn’t be excluded, but only an investigation can answer that question,” Igor Burenkov, AvtoVAZ’s press representative, said by e-mail today. “It can’t be said that the incident cost nothing. An attempt was made to tarnish the company’s reputation.”
Russia’s Financial Markets Service opened a probe into “share manipulation” related to the fake ad in the Vedomosti newspaper yesterday, the watchdog’s head, Dmitry Pankin, said in a blog post after the market closed. The watchdog has sent inquiries to Vedomosti and other news outlets that published the ad, according to the post.
The false ad gave a purchase price of 24.17 rubles apiece, or a 61 percent premium over the close on Dec. 19.
“People took it as actual news,” Pavel Dorodnikov, head of equity trading at Rye, MAN & Gor Securities, said by phone from Moscow. “Our clients saw the ad and rushed to buy shares but then sold them at a profit, so all’s well that ends well.”
An advertising agency placed the order for 290,000-ruble ($9,437) space, Gleb Prozorov, Vedomosti newspaper’s managing director, said by phone.
Ad agencies are responsible for the legitimacy and accuracy of information, Prozorov said. Following the incident, Vedomosti will require agencies placing ads about buybacks or share issuances to provide verification from the companies mentioned, he said.
Renault and Nissan Motor Co. this month signed an agreement with Russian Technologies Corp., the state-run AvtoVAZ shareholder known as RusTech, to form a joint venture that would own 74.5 percent of the carmaker.
“What does any investor or broker do when he sees such information?” Alexei Bachurin, an equity trader at Renaissance Capital in Moscow, said by e-mail. “Immediately calls the company’s investor relations and verifies whether this is true.”