RTS_MO. Week 16

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Market Overview: Russian Stock Market RTS 2011, wk. 16

Week 16 was restless and volatile forRussian Stock Market (RTS). On Monday RTS experienced

a tremendous drop, resulting in 1941.43 points. However by the end of the week RTS not only

recovered its positions, but also has finished this week in 0.59% surplus. By the end of Fridaysession RTS index was equal to 2047.60 points. Strong drop on Monday was caused by change of

USA credit from agency S&P. On Monday S&P declared that USA sovereign rating downgraded

from stable to negative, keeping AAA level. Bad news from Europe, especially from Greece

slowed down the recovery. Market was quite passive on Friday because of public holidays in many

countries due to Easter. Oil and gas sector experienced the biggest growth this week,

telecommunication sector the biggest decline, 6.15% and -0.21% respectively. These week winners

are Polyus Gold (PLZLS) with 8.86% growth and Tatneft (TATNS) which experienced an

increase resulted in 5.72%. Week 16 was disappointing forSberbank (SBERS) whichdeclined for

1.52%.

Chart 1. RTS in week 16. Source: tikr.ru

The biggest surprise of this week was Polyus Gold (PLZLS), which is the leading gold producer in

Russia and Kazakhstan, and the only Russian company among worlds largest gold producers.Share price at the beginning of the week was 40.80 EUR, however, due to certain factors it rocketed

1 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained init. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.

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to 44.41 EUR, which eventually resulted in 8.85% increase. 16th week was very abundant, firstly,

as the USA is implementing expansionary monetary policy and their budget deficit is enormous US

dollar depreciates, therefore gold becomes more attractive as alternative investment. It boosted goldprice by 1.6% this week. Secondly, PLZLS plans amalgamation with foreign companies, among

them are AngioGold Ashanti and Newmont Mining, it might result that PLZLS will be in the top 3

biggest gold companies. And the last and definitely not the least reasons for such increase in share

price is PLZLS performance it increased it sales by 68% this year and board of directors

approved payment of dividends 0.49 EUR per share.

Chart 2. PLZLS in week 16. Source tikr.ru

As it was mentioned earlierTatneft (TATNS) was the second most successful firm during previous

week. TATNS experienced strong growth during Tuesday which resulted in 5.18%. Afterwards

TATNS had correction, and at the end of the week increase was equal to 5.72%. Recently TATNS

improved its technical base, implementing different innovations connected with extraction of oil.

MoreoverTATNS increased its dividend payables on preference shares. But the main reason was

implementing new tax regime, which will give an advantage for the company, due to lower tax

expenses.

Soon annual report for 2010 year will be published. According to different experts previous year

wasnt successful forTATNS and currently its shares are considerably overvalued.


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Chart 3. TATNS in week 16. Source: tikr.ru

Sberbank (SBERS) had the biggest decline on the 16th week. At the very beginning of the week

share price decreased from 2.60 EUR to 2.45 EUR less than in one day. It might be effect of the

article published by RosBiznesKonsalting (on rbc.ru) in which was claimed that SBERSs shares

are overvalued. Starting on Tuesday during remaining week share prices were slowly regaining

their old value. Closing price was 2.56 EUR, which eventually resulted in negative price

development for whole week -1.52%.


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RTS_MO. Week 16