Updated August 11, 2008

   In the nearest future China's issuers will get an opportunity to place their securities at Russia's market directly.

In addition, People's Republic of China will place its gold and currency reserves in Russia as well.

It becomes possible due to a memorandum about information exchange Russia's Federal Financial Markets Service and China' s Commi

ssion for securities regulation have signed.

   Federal Financial Markets Service (FFMS) of the Russian Federation and Commission for securities regulation of People's Republic of China signed a memorandum targeted at attracting the Chinese investments and financial institutions to the Russian stock exchange market. According to FFMS head Vladimir Milovidov, a preliminary agreement about this document signing was reached during Vice Prime Minister visit Igor Sechin to China in July-end.

"After the parties had signed the memorandum, they accepted oblig ations

to provide information about issuers, including insider data", marked FFMS expert Tatyana Medvedeva.

   This memorandum signing expands Chinese investors' opportunities to invest facilities in Russia.

"China is actively looking for areas to invest its capital", explained Vladimir Milovidov. "But an opportunity to invest abroad for the majority of the Chinese institutions that manage gold and currency reserves in particular, is also predetermined by memorandums signed with foreign regulators". According to Mr.

Milovidov, the Central Bank of China that seeks diversification of gold and currency reserves, has already expressed its private interest in investing in Russia.

   Experts consent, due to the record fall within

the last weeks, the Russian securities went down to attractive levels.

"After the situation stabilizes, investors will start to pay attention to cheap and quite underestimated Russia's assets", is sure Deutsche Bank co-director of analytical department Yaroslav Lisovolik. China's investors have quite long-term horizon of investing, and fundamental factors are of primary importance for them, an expert marks.

   "In their turn, Russia's issuers have been long ago watching China, seeing their prospects for investments", supposes KIT Finance director for operations at capital market Sergey Zharov. Gazprom, SoyuzMetallResource (owned by Basic Element) and VTB Bank have already declared about their plans to hold placements in Ch

ina.

   Second core result expected from the document signing is extension of ruble and yuan payment area. In the opinion of FFMS representatives, VTB representative office launched in Shanghai last year, will mainly assist in this process. In FFMS are sure, activity development of Russia' s bank

s in China provides a basis for stake growth of ruble payments in investment operations between two countries.

   Moreover, the memorandum signing provides access for securities of the Chinese issuers to the Russian market. According to section 51.1 of the act "About securities market", "foreign issuers' securities are accepted to placement and public circulation in the Russian Federation in terms of available agreement signed by a federal executive body on securities market and corresponding body (organization) of a foreign issuer country and envisaging order of their cooperation". Thus, it goes not about depositary receipts, but about direct access. "China's issuers need attracting investments on foreign floors, as the internal offer is already overheated", sums up Zerich Management Investment Company chief executive Alexander Scheglov.