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Market Overview: Russian Stock Market RTS 2011, wk. 17

Week 17 was very volatile and changeable for Russian Stock Market (RTS). The week started

with a dramatic increase in RTSI on Monday morning which was followed with important drop in

the afternoon. During the week RTS index was very unstable and was fluctuating significantlyclosing the week with 2033.26 points, what is a decrease of 0.77% comparing with the previous

week. Negative tendency of RTSI could be partly explained by regulations in law concerning

exports of gasoline. All RTS indexes showed different tendency this week, some of them faced an

increase and of course some of them had a drop. Telecommunication industry experienced the

biggest growth this week while electro energetics industry suffered the main decline, gaining 1.72%

and losing 1.44% respectively. The only company which showed a positive tendency this week was

Polyus Gold (PLZLS) which share prices had an enormous growth of 9.70%. All the remaining

companies suffered losses and the biggest looser this week was Tatneft (TATNS) with 7.04%

drop.

Figure 1 RTS index during week 17. Source: tikr.ru

The only winner this week is Polyus Gold (PLZLS). Price of its shares increased 9.70%; the other

entire company share price decreased, prices ofPLZLS increased this week. All the metal industry

prices increased by 0.75%, but Polyus Gold (PLZLS) was an obvious leader in the share price

increase. This increase is explained by an agreement which Polyus Gold (PLZLS) had made with

KazakhGold Group Limited about the purchase of majority stake of the KazakhGold. This share

purchase will increase market value ofPolyus Gold, thus, increasing earning. It is the main factor

which attracts investor interest and increases the price ofPLZLS shares so much.In the upcoming

weeks it is expected that PLZLS share prices will discontinue growing so rapidly and may even

have a drop.

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Market Overview: Russian Stock Market RTS 2011, wk. 17

Figure 2. GMKNS share prices. Source: tikr.ru

As a usual tendency Tatneft changed its last weeks rapid growth to a big decline in the share

prices. This weekTATNS experienced an enormous drop of 7.04%. This decrease is explained by

an annual report of TATNS directing board which showed that Tatneft still cannot control itsexpenses. The report showed that earning increased by 23% during 2010, but expenses grew by

29%. Such results are not very satisfactory for shareholders, thus, TATNS share prices decrease as

many shareholders are willing to sell Tatnefts shares. Experts maintain that in the nearest future

the company cannot change current situation, thus, to attract new investor attention will be very

difficult for the company and its share price most likely will decrease and in the best occasion

remain indifferent comparing to the current situation.

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Market Overview: Russian Stock Market RTS 2011, wk. 17

Figure 3. TATNS share prices. Source: tikr.ru

This week traders preferred to sell their stocks just before Mays holidays, it resulted in the first

negative month forRTS since September 2010. Unfortunately, next week does not promise to bring

new surprises. Situation in Middle East is still very ambiguous because of riots in Egypt and Syria,

therefore oil prices will have an upward trend during the next week. Decision of increasing the

discount rate from Russian Central Bank may have a negative impact on investments in the country;

as a result there is a possibility of decline in nearest future. However, few experts admit change in

0.25% in percentage wont affect market at all. Due to public holidays next week will be very

short, and is likely to be free from serious market fluctuations. Excepted corridor for RTS index

next week is from 2000 to 2060.

Review by: Laura Laube, Eriks Petrovs, Valerijs Rezvijs, Eduards Sidorovics

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