13th May, 2005

The Russian equity market deepened its slide on Friday. Yesterday’s wave of negativity from Western markets was compounded by softer global oil prices on the back of strong US stockpile figures and weaker Chinese demand. Reserves surged 2.7 mln barrels to 329.7 mln for the week ending May 6, which is 6.5% higher than the average level over the past five years. In addition, the closure of shareholder registers at Russian companies has created a lack of incentive for investors to buy into Russian stocks.

Meanwhile, the upward correction of other blue chips was driven by the fact that Russia has hammered out an advance loan repayment agreement with the Paris Club ($15 bln of $43.1 bln at par). Needless to say, Sberbank got a shot in the arm on this deal. The early repayment of Russia’s foreign debt will make Russian Eurobonds more attractive and Sberbank is a major holder of these bonds.

Most blue chips trended down on Friday within a band ranging from -0.1% (Sberbank) to -1.47% (Surgutneftegaz). The RTS index dropped 1.37% and settled at 639.90 with trading volumes totaling $16 mln.

MICEX blue chips were also largely in negative territory, with the main decliners including Mosenergo (-0.1%), NorNickel (-1.6%) and Lukoil (-1.98%). On the other side of the spectrum, Surgutneftegaz (+0.1%) and Sibneft (+1.2%) were among the gainers. The MICEX index eased 0.26% to 580.04 on volumes amounting to $625.08 mln.

On the SPICEX front, Gazprom shed 1.73% to close at Rub 77.16 with 9.7 mln shares changing hands.

Finam
Russian Brokerage Company
http://www.fin-rus.com