Actuality January 21, 2008

The week

(January 14-18, 2008) appeared to be the most unsuccessful for the Russian market since March, 2007 when decline of RTS index exceeded 7%. This time decline happened because of concern about possible recession in the USA. Meanwhile, for a long time Russian stock market kept aloof from the markets of the developed countries, only in the middle of January correction began.

As a result RTS index has lost 6,7 % for a week and has fallen to 2159,10 points.

The Moscow Interbank Stock Exchange (MICEX) index has fallen by 6,6 %, to a level of 1788,34 points.

Concern about dynamics of economy

of the USA was reflected on the raw markets. For the first time during the last month and a half the prices for Brent oil fell below $90 for barrel during January 14-18, 2008.

In this connection the securities of oil and gas sector lost the most, the branch index of RTS Oil and gas went down by 8 %.

During January 14-18, 2008 investors showed the interest in producers of agricultural products and coal.

"High prices for agricultural raw materials on the world market, revaluation of agricultural lands on the Russian market and growth of capitalization of the industry world producers confirm an optimistic estimation of prospects of the Russian agricultural sector participants", analysts of Capital Renaissance note.

Razgulay Group stocks have grown by 13 % for a week. As a result of keeping deficiency on the world market of coked coal the leading investment banks revised predictions for the prices for current year.

In particular, analysts of Deutsche Bank predict, that in 2008 the price for solid coke of premium class will grow by 60 %, to $150 for a ton.

The previous forecast assumed rise in prices for 25 %. In 2009 reduction of prices by 5 %, to $143 for a ton is expected.

However, such estimation exceeds their previous forecast by 28 %. It concerns the prices on the spot market, and producers sell the most part of production by long-term contracts.

"They, in turn, will be signed in the nearest future, therefore on the background of current situation on the coal market the terms of contracts will be favorable to producers", Dmitry Skvortsov notes.

As a result, in the leaders of growth are securities of Yuzhnyi Kuzbass, SIBENCO-Krasnoyarsk, and Kuzbassrazrezugol Coal Company, that grew in price by 10-30 %.

Stocks of the gold mining companies Polyus Gold and Polymetal were in demand of investors during January 14-18, 2008. As a result their quotation on MICEX grew by 6,3 % and 7 % respectively. The last week gold price has established a new absolute record – $914 for troy ounce.

"In 2007 the market ignored the fact of gold price growth and consequently the gold mining companies have strongly lagged behind the market. After the moment the prices exceeded a level of $900, investors started to buy securities again," the analyst of Broker Credit Service Anastasiya Zhdanova notes.

"They have all reasons to believe that gold is able to reach $1 thousand for ounce already in 2008". The price for silver also reached a historical maximum ($16,58 for ounce). The companies themselves caused purchases of their securities. Polymetal informed that in the end of 2007 period of the hedge contract validity expired, within the limits of which the company had to deliver silver by under cost ($7 for ounce). "Despite the fact that this news was expected, its official announcement impressed investors, having provoked a wave of acquisitions of company stocks", the analyst of Bank of Moscow Dmitry Skvortsov notes. "As for Polyus Gold support, support to its securities was given by their possible purchase by the basic stockholders who on the edge of special meeting of stockholders try to increase their holdings".