Actuality December, 12, 2007

Investment banks fear overstocking in separate sectors

The volume of stock offering on the market can make up about $50 bln in 2008, counted Russian investment banks. It is half as much again than the offering in the current 2007. Specialists consider that the mass entrance of companies to the market can result in its overstocking and negatively affect stocks quotations of those companies which have already made the offering before.

“2008 will be characterized by two basic tendencies: on the one hand, by the powerful rates of economy growth in Russia, on the other – by the fears of growth reduction of international markets”, the experts of “Troika Dialog” company mark in their prospects. In their opinion, these factors allow to expect, that the total volume of initial offering of the Russian companies will make up about $50 bln. According to the results of the current 2007 the offering volume of the Russian companies will make up $35 bln that is twice as many of the last 2006 year ($17 bln).

In experts’ opinion, in 2007 the total volume of offerings could have been bigger, if there wasn’t the August financial crisis.

So, the largest offering of “Rusal” company was postponed from 2007 to the next year (no less than $5 bln). Therefore specialists from “Renaissance Capital” forecast $20-25 bln for the future year. Ruben Aganbegyan,

the head of investment-bank services’ management of “Renaissance Capital” investment group, marked that next year the basic risk that can influence plans’ change of issuers, can also become the high market volatility.

The analysts of both companies mark that in 2008 the metallurgical sector will prevail on the market of offering.

In the opinion of “Renaissance Capital” representatives, its share can make up 30-35% from the total volume of the Russian IPO.

Large volumes are also expected in the real estate sector, and also among energy and financial companies. IPO can conduct representatives of industries, practically not presented at the market now, such as transport, medicine and insurance.

Market appearance of several issuers of the same sector at once (such as media, insurance, transport, agriculture) can considerably influence companies, which stocks are already traded on the market.

Specialists of “Troika Dialog” pay attention, that offering of Novorossiysk Commercial Sea Port (“NCSP”) positively influenced the estimation of all transport sector on the w hole this year.

Next year six companies of this industry can appear on the market, including “TransContainer”, “Transaero”, “Sibir, S7” airlines and Far East Shipping Company (FESCO). Concerning media sector, now the stocks of only three companies of this industry are traded on the market and the listing of four more is expected next year (“Profmedia”, media companies “Nafta Moskva”, “Renova” and Gallery Group groups).

However, the simultaneous offering of several companies of the same sector can play in the hole.

“The more companies of the same sector enter the market, the harder passes every new offering”, marks Ruben Aganbegyan.

“So, for the successful hold of offering in energy sector investors should understand, that each company entering the market is unique”.

In the opinion of specialists from “Troika Dialog”, there is the danger of overstocking in other sectors also. Six planned bank IPO, the largest from which will be the offering of Gazprombank, can negatively influence quotations of stocks of other banks, VTB foremost.

The simultaneous entrance of seven companies of real estate sector can negatively influence stocks of “Sistema-Hals”, including such large, as SU-155.