Updated August 6, 2008

   On the background of prices drop on primary markets, on August, 5 took place quotations fall on the stock floors.

According to the day results, stock exchange indicators of MICEX (Moscow Interbank Currency Exchange) and RTS (Russian Trading System) lost 3,7% and 4,4% respectively. Fall at the Russian market continues 11 weeks already. As experts mark, they have not observed such long drop since 2004, when the state had made tax claims that resulted in Yukos bankr upt

cy.

   On August, 5

MICEX index went by 3,72% down to 1397,46 points mark.

Stock exchange indicator has not been reaching such low level since October, 2006.

RTS index fell by 4,42% to 1812 points – the lowest level since May last year. "If one converts RTS index nominated in dollars to rubles, it turns out it is at the February, 2006 level", as marks Troika Dialog portfolio manager Vladimir Potapov. "So, Russia's market reverted to its state in 2006".

   One of the reasons of this fall was prices drop at primary markets.

Oil quotations fell by three-week minimum down: as of September, cost of WTI oil futures contract went by 1,3% down to $119,8 per barrel, cost of Brent oil went by 1,71% down to $118,6. Prices for other raw materials went down as well, for metals in particular.

Gold and silver lost more than 2%. Nickel futures went by 1,56% down to $17,927 level.

   It is quite natural that in terms of prices drop at commodity markets, the Russian stock market (with 50% primary companies' securities) suffers most, as western investors cut securities in their portfolios of those countries, where primary companies prevail, as marks head of Alliance Continental managing company active operations department Denis Novikov. Moreover, as it has been already marked, the Russian market is still oppressed by situation with Mechel and TNK-BP.

As a result, the majority of Russia's "blue chips" lost more than 6% on August, 5. On MICEX Gazprom Neft stocks price fell by 6,74% down, Rosneft – by 6,5%, Tatneft – by 6,38%.

However, on the background of overall collapse some securities could even demonstrate some growth.

Aeroflot stocks grew by 1,74%, Rostelecom – by 0,07%.

   Current Russia's market situation differs considerably from collapses that have taken place in early year, as experts mark.

First, then the Russian market has fallen with all other world floors at once. On August, 5 the European indices added 2,4-2,6%.

   Moreover, in January the collapse was rather short – then within three days the Russian market lost 15%, and nobody could react quickly, and then the trade continued at the lowest levels quite long. "Now the fall takes place gradually, without significant growth", as marks Konstantin Shapsharov.

Gradual fall continues within 11 weeks already – since May, 19. During this period, RTS index lost 26,59%, MICEX – 28,93%. "At May-end the massive foreign purchase has stopped at the Russian market, and gradual sales have started at commodity markets on the background of fall", as says Denis Novikov. "At July-end Mechel case has complicated the situation". He marks that Russia's market has not observed such long fall since 2004. Since March, 2004 till June-end RTS index lost 35%. As it was marked, then the fall took place on the background of tax claims made by the government that resulted in Yukos bankruptcy. However, experts consent that the current situation is ra ther unique and differs considerably from the situation in Russia in 2004.

"Now oil prices exceed $118 per barrel, and then they have been twice lower", as explains Denis Novikov.
Experts are sure that the market cannot fall endlessly, and, in any case, it starts to recover a certa in moment, and moreover,

the Russian market looks attractive from fundamental viewpoint.

"The Russian market is cheaper, than all the rest markets in developing and developed countries", as marks Vladimir Potapov.

However, Konstantin Shapsharov supposes, there are no terms for growth at the market.

"Some time should pass before investors understand that cheap securities are attractive", an expert sums up.