18 th May, 2005

Trading was visibly upbeat on the Russian equity market Wednesday on the back of yesterday’s news that Gazprom, Rosneft and the relevant government agencies have finally worked out the road plan for the state to obtain majority control over the gas monopoly. Since this news broke late yesterday afternoon, only MICEX had the chance to respond. As a result, benchmark RTS felt the delayed reaction of this development in Wednesday’s session, whereas trading was mixed on MICEX.

On the downside, a fair amount of negativity built up on rumors of PM Mikhail Fradkov’s imminent resignation, although after an official disclaimer stocks began to drift north again. The main blue chip under fire was bellwether UES, which runs the risk of seeing the power reform process dragged out if the Cabinet goes down.

Against this checkered backdrop, most RTS blue chips landed in positive territory within a band ranging from +0.9% (Rostelecom) to +3.08% (NorNickel). The RTS index advanced 1.52% to 647 on still rather light volumes amounting to $11.4 mln.

MICEX was less upbeat with blue chips closing within a range from +0.24% (Sberbank) to +4.03% (Yukos). Other stocks, including NorNickel (-0.78%) and Rostelecom (-1.19%) ended up in the red. The MICEX index was flattish (+0.06%) on slightly under-average volumes totaling $713.99 mln.

Gazprom was still riding the crest of Tuesday’s wave as the company seems to be well on its way back towards testing the Rub 80 resistance level, if not higher. The gas monopoly added on 1.54% to Rub 78.98 on SPICEX with another big turnover - 31.13 mln shares - changing hands.

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