MICEX (Moscow) - Russian Stock Market overview

27/10/2008 – 31/10/2008

During this week MICEX has increased by 33,028 % to the value of 766.92. The average daily turnover was about 742.4mln Euro. The top gainer of the week is Systema AO with 74.92%   and the closing price 0.182 Euro. Seventh continent  with the closing price of 10,43915 Euro is the week’s top loser. Good tendency on the Russian Stock market has several reasons. The major event was the Federal Reserve's interest-rate cut that resulted into the decrease in interbank borrowing costs. This spurred foreign investors to search for new bargains. The effective measures of Russian government and the decision of VTB Bank to provide credit lines to Russian enterprises totaling 24 billion rubles could be another reason of the investors’ revival. Together with most of the Russian  oil and gas companies Gazprom (GAZP) had a sharp increase by 54.16% in share prices during this week.

After a long trend of loosing value Gazprom’s shares finally started to recover mainly because of the fact, that price of oil, which together with gas are the main sources of income for Gazprom, finally started to rise. What is more, the value of the Gazprom’s shares has decreased dramatically in the last decade, and investors realized an excellent opportunity to buy reliable and valuable shares for an extremely low price, so the demand on them increased which positively influenced the price of Gazprom’s shares. However, it would be wrong to say that the price of Gazprom’s shares will definitely rise the next week as well because the situation in the market is completely unpredictable.

At the same time, Sberbank Rossii (SBER) share rose by 63%, closing at 0,8 EUR. The opening price at the beginning of the week was 0,5 EUR. The prices of Sberbank shares were rapidly growing on Tuesday and Wednesday, as there was a bullish sentiment on the global market. Furthermore, according to Interfax, Sberbank is looking for an opportunity to acquire one of the systemic banks in Ukraine in order to enter the top 5 on that market, which might positively affect the prices of Sberbank’s shares in the future. As it has been said before, the market is very volatile and it is hard to predict the behaviour of the prices, but as long as the optimism on the developed markets persists (and it may well be for not too long), Sberbank’s shares will grow, together with the Russian stock market.

GMK Norilskiy nikel (further GMKN) is the biggest world’s Nickel and Palladium producer. During the whole week (27.10- 01.11) the share price of GMKN was increasing. It has risen dramatically by 65.9%. VEB (Russian government bank) has given 4.5bil $ to company Rusal which took a loan from western banks and bought 25% shares of GMKN. Rusal have used this money to pay for the loan and save the shares. Otherwise if VEB has not given this money then GMKN share would have been sold and the share price of all company would have dropped. However, for the reason of financial crisis it is predicted by Reuters that the company will reduce the number of employees by 10% (136 people) in Moscow office. Most economic analytics suggest buying and saving the shares of GMKN, but not selling at the moment, because it may be more profitable in the future.

Next week is predicted to continue rising traffic, which could last until the end of the first decade of December. The major event that will influence the world market situation and the behavior of investors during the next week is the elections in America. As war in Iraq became the reason of essential growth of the world prices for oil because of the military premium, the victory of democrats might lead to reduction of prices. Another major factor of movement in the market of raw material now is the balance of demand-offer, in particular, questions - whether can finish the countries-members OPEС a level of extraction up to declared, whether there will be a second downturn of volumes which has been planned for December, and whether will support policy ОPЕС, the countries which are not entering into cartel.