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July 23. In 3Q, Russian banks will make foreign debt payments to a total of USD 13.4 bn, a 37% decrease from USD 21.3 bn in 2Q. >>>		July 23. On 1 August 2008, oil export duty will hit new historical record high and amount to USD 495.9 per ton. >>>		July 23. Severstal revised upwards its planned volume of investments into the development of US-based WCI Steel (Warren, Ohio). >>>

OUR ADVANTAGES

1		Over the past few years, the Russian stock market has shown rapid growth rates, outstripped solely by the Chinese equity market. In 2005-2006, Russia’s benchmark stock indexes grew by 70-80 % per year. Moreover, according to estimates by leading world rating agencies, the Russian market is still significantly underestimated, which gives reason to assume that in the near future the Russian market will continue to develop at a rapid pace, whereas there is growing investor scepticism towards developed markets and the Chinese market, which is tightly pegged to western consumption due to the fear of serious overheating of these markets and expectations of a recession.

2		For the Russian stock market these threats are not so critical, because the Russian economic miracle is based not only on global economic performance, but also on growing internal demand stoked by growth of household income. In times of the "Iron Curtain", when the Soviet state had to operate in conditions of international political and economic isolation, and sometimes even blockade, a unique economy was created in Russia, which included full manufacturing cycles of nearly all kinds of industrial products ranging from extraction of virtually all kinds of raw materials to final products. Russia is incredibly rich in natural resources. This has made the country one of the leading O&G players globally (by gas reserves Russia is first in the world, and one of the three richest oil countries in the world) and metals. Even though the Russian economy has still not completely overcome its dependency on export demand, sectors focused on internal demand in Russia and the former Soviet Union countries are developing rapidly. For instance, in 2006 when world oil prices experienced serious fluctuations, the fastest growth rates of capitalization shaped up in the sectors of telecommunications, banks and energy. The top gainers in these sectors have shown annualized upside margins ranging from 100 up to 200%.

3		Close technological cooperation with the companies of the former Soviet Union (USSR) and other COMECON countries lends additional impetus to the expanding Russian economy. Swift re-establishment of these industrial-marketing chains is reflected in the increased momentum of M&A activity, which sharpens the competitive edge of Russian companies and provides opportunities to enter European markets, and boosts their market caps. Even those Russian companies whose shares trade actively on global equity exchanges, still lag behind in terms of capitalization in comparison with their global competitors, frequently trading at 30-40% discounts to global peers. At the same time, the shares of many promising Russian companies are still off the radar screens of most investors either because they await listings on global equity markets or they trade in small volumes on the RTS. This, in turn, gives them robust upside potential and raises their long-term investment appeal.

4		It should also be noted that Russia holds immense scientific and technical potential. For more than 70 years a tremendous amount of capital has been invested in the development of science and education. State education was free of charge and accessible to the entire population. Requirement to maintain military and technical parity with Western nations led to the creation of a substantial network of R&D organizations. This has allowed the country to retain a high level of technical expertise and led to rapid development of the high-tech sector; for example, annual increase of the IT sector in Russia reaches almost 100%. The foregoing factors have caused an upsurge of interest among investors looking to commit funds in the Russian economy and have allowed stock market players to reap handsome returns on their investments.

News

July 23. Mechel has started making long-term contracts for coke supplies with Russian consumers. >>>

July 22. Novolipetsk Steel (NLMK) has wrapped up the buyout procedure in Dolomit, Stagdok and Altai-Koks >>>

July 23. LSR Group, the largest developer and construction materials producer in North-Western Russia, has become an important player in the commercial property segment in Moscow. >>>

July 23. Acron's price range within the SPO amounts to USD 12-15 per GDR and USD 120-150 per share >>>

July 22. The commercial production data for Russia in June 2008 show that the slowdown in certain industries was caused by cost-push inflation, ruble strengthening and credit appreciation >>>

July 22. Russian president, Dmitry Medvedev warned the governors that if they do not fulfill their parts of the gasification program, they will face "administrative and organizational measures" >>>

July 22. Gazprom Neft 1Q net profit under US GAAP grew by 6.6% q-o-q to USD 1.41 bn >>>

July 22. Severstal, Indian-based Essar, China-based Shagang and a consortium of Japanese companies are at the second stage of the struggle for CSN's iron-ore subdivision in Brazil >>>

July 22. Fitch has assigned its B+ long-term issuer default rating (IDR) to Tattelecom with a positive outlook >>>

July 21. Gazprom board chairman, Alexei Miller, and Rosneft president, Sergei Bogdanchikov, have signed an agreement on cooperation in gas distribution issues in the Far Eastern Federal District >>>

July 21. Lukoil values the project for oil production at the Varandei field on the Arctic shelf at RUB 130 bn >>>

July 21. Lukoil has purchased an Italian oil refinery, which will enable Lukoil to perform undisturbed oil supplies to the Balkan region >>>

July 21. Lukoil plans to produce 94 mn tons of oil and 16 bcm of associated gas in 2008 >>>

July 21. At a meeting held in absentia on July 16, RusHydro BoD approved the floatation of its additional share issue for a total of RUB 8.68 bn in favor of the state >>>

July 21. At a meeting on Friday, St. Petersburg town-planning committee considered the development blueprint for the territory bounded by Dobrolyubov Avenue, the Malaya Neva Embankment, Talalikhin >>>

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