27th May, 2005

In early Friday morning trading blue chips staged an attempt to rally on positive news from Western equity and commodity markets. But in the absence of internal drivers, the market receded into a side trend punctuated by losses during the afternoon session. Negativity came from newswires which reported the Prosecutor General’s Office as having interrogated a number of UES and Mosenergo officials and confiscated some incriminating evidence from the offices of these companies.

Gazprom shares came under pressure Friday on news from the Ministry of Industry and Energy that the state is doubtful whether it will be able to deliver on its promise to consolidate a controlling stake in Gazprom by the June 24 AGM. Deputy head of the ministry Ivan Materov said the Russian government intends to review matters pertaining to gas industry restructuring before gaining control over the state gas monopoly. This statement came as another harsh wakeup call for investors, who will once again see their hopes shattered due to fudging on the timeframe for ring fence removal.

The band of modest RTS gainers on Friday ranged from +0.14% (Lukoil) to +0.49% (Rostelecom). Topping the list of losers was Mosenergo, which is still taking flak over Wednesday’s disastrous power outage. By the close, the RTS Index advanced by 0.11% to 671.40 on thin trading volumes equal to $7.8 mln.

A number of MICEX blue chips also finished within a narrow spread which varied from +0.07% (UES) to +0.76% (Sibneft). The decliners included Mosenergo (-2.42%), Surgutneftegaz (-0.42%) and Lukoil (-0.36%). The MICEX Index settled at 597.33 (+0.04%) on soft volumes totaling $571.15 mln.

Meanwhile, Gazprom ended 0.3% down on SPICEX, with the last deal closed at Rub 79.61.

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