30th May, 2005

The Russian equity market saw sluggish trading predominantly in the red on Monday. Memorial Day in the US dampened the activity of foreigners on the domestic market while high commodity prices gave the Russian market a boost. A mild negative was France’s rejection of the EU Constitution in yesterday’s referendum, which throws up a roadblock to European integration. As a result, the euro plunged against the greenback, making dollar-denominated assets look more attractive. And it’s no secret that a rising dollar is bad news for emerging markets, including Russia.

On the upside, Gazprom shares traded up on news from the Russian Federal Property Fund that the state is set to proceed with its plan to raise the state’s stake in the charter capital of Gazprom on the heels of an appraisal by Morgan Stanley which values the gas monopoly in the range of $78.2- 92.32 bln ($3.30-3.90 per share). This way, the cost of the 10.74% stake the state needs to reach a majority holding would be $8.39 - 9.92 bln. On top of that, Gazprom’s official appraiser, Dresdner Kleinwort Wasserstein (DrKW) found the stake to be worth $10.2-115 bln. One way or another, the market took cheer in the fact that the appraisals have been completed and were made public, which means the deal is still on track.

By Monday’s close, most RTS blue chips dipped within a spread ranging from -1.00% (UES) to -2.30% (NorNickel). The RTS Index eased 0.69% to 666.79 on thin volumes amounting to $8 mln.

MICEX blue chips also ended up largely in negative territory yesterday, within a range varying from -0.01% (UES) to -1.00 (Mosenergo). Sberbank (+0.8%) bucked the trend and saw modest gains. The MICEX Index settled at 596.15 (-0.2%) on soft trading volumes which totaled just $386.3 mln.

Meanwhile, Gazprom (+0.2%) was marginally up on persistent hopes of upcoming liberalization and removal of the ring fence, with the last deal going for Rub 79.74 and 9 mln shares changing hands.

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