17th May, 2005

The market started to correct up moderately in early Tuesday trading. But towards the end of the session a major positive broke when Gazprom and the Economic Development and Trade Ministry went public with a statement about the state’s firm resolve to raise its stake in Gazprom which preludes the end game of removing the ring fence. This big piece of upbeat news caused blue chips to surge across the board and brought a welcome relief rally to the gas monopoly.

According to Gazprom’s BoD chairman Dmitry Mendeleyev, the merger with Rosneft is off and the state will secure a controlling stake in the gas mammoth by paying out cash for the needed equity. The equity will be acquired at fair market price. The state plans to finance this deal by taking out loans from leading global financial institutions and pay for it by putting up a stake in Rosneft for sale on the open market. The deal should be pulled off before the gas monopoly’s AGM, which is slated for June 24, according to the company’s press release.

The following blue chips finished Tuesday’s trading session as decliners: NorNickel (-1.2%), Surgutneftegaz (-1.04%), while on the other side of the spectrum the following blue chips ended up in the black: Sberbank (+0.95%), UES (+1.06%) and Lukoil (+2.7%). The RTS index advanced 0.63% to 637.71 on still thin volumes amounting to $9.9 mln.

Trading was more upbeat on MICEX with major stocks posting healthy gains ranging from +2.4% (Rostelecom) to +14% (Mosenergo). The MICEX index was up 4% to 587 on bigger volumes totaling $733.49 mln.

But the top winner of the day was far and away Gazprom, which walked away with a market cap 6.5% higher than at the previous close. The gas monopoly saw the last deal go for Rub 78.77 with a massive 45.4 mln shares changing hands on SPICEX.

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