Russian Trading System Stock Exchange (RTS) 21/04/2012 - 27/04/2012 (week 17)

Week 17 was very unpredictable and volatile; however, the trend was clear from the beginning of the week downwards. The week started with RTS index plummeting and reaching Mondays bottom of -2.52% growth. Since then index started to change direction and rebounded somewhat by 1%, but plummeted again on Tuesday and reached the bottom of the week so far. Since then up until beginning of Thursday the index was recovering, but then it sank again and Friday started with RTS index hitting weeks low of -3.10% growth. However, the index was recovering throughout the Friday and finished the week with a negative growth of 1.05%.

RTS index change during week 16; Source: http://www.tikr.ru/

RTS Oil & Gas and RTS Metal & Mining indexes contributed most significantly to the drop in RTS index, since both dropped by 1.82% and 1.62% respectively. However, RTS Industrial index was going to the opposite direction and ended week with a growth of 2.69%. Since this week was indicated by a huge drop in RTS index, all the companies that are listed in the iGame saw their stock prices plummet. Three most unfortunate companies are RusHydro (HYDRS), Surgutneftegas, Pref (SNGSPS) and Rosneft (ROSNS) whose stock prices dropped by 4.43%, 3.3% and 3.06% respectively. However, we will analyze RusHydro, JSC Severstal (CHMFS) and Gazprom (GAZPS) since the latter 2 were the biggest winner and the biggest looser of the previous week. The worst performer of the week is RusHydro (HYDR) with a 4.43 % decrease in the share price. Company is world's second-largest hydroelectric power producer and Russias largest power-generating company. Development of the share price on Monday followed RTS indexs movement which plunged rather significantly. Afterwards, some relatively passive days were observed until the grand news was announced: audited annual report of 2011 was published,

which stated a marginal (2%) decrease in EBITDA compared to 2010. One of the main reasons was lower electricity tariffs, which are regulated by governmental institutions, thus decreasing RusHydo profitability. On the other hand, Russia expressed willingness to privatize RusHydro until 2017 which could be a new price driver, although in a very long run.

RusHydro (HYDR) price index change during week 17; Source: http://www.tikr.ru/

Second biggest loser of the week is an international mining and steel producer company Severstal (CHMFS). The company operates in eight different countries and employs 70000 workers. Severstals share price decreased by 2.5% to 397.19 RUB. Week was started with much higher price than previous weeks closing price; nonetheless, afterwards price was decreasing gradually till Friday. On that day Severstal published its annual report of 2011 and operational results, which might have positively impressed investors and the price started rising again. It is highly possible that price will increase next week knowing that results in financial statement are improved compared with previous year.

Severstal (CHMFS) price index change during week17; Source: http://www.tikr.ru/

The week turned out to be rather volatile for Russias gas export monopoly - Gazprom (GAZPS), with an overall decrease of 1.07%. Negative influence from the previous week could still be felt as the downward trend continued. Consequently, the stock price had a major drop on Monday and stayed there until Friday morning. Even though the overall Oil & Gas industry was in a similar situation, Gazprom had a series of good news coming out. Analysts claim that the year 2011 was a real success and the brilliant performance continues in the first quarter of 2012. In April gas exports to Europe, the main customer, were 6% above the planned level for the month. These and similar news, especially recent discussions about oil and gas supplies to China, had a positive impact and aroused optimism among investors. Due to that stock price managed to recover in the end of the week, closing at 169.17 RUB level. Future prospects might look bright for the company, but there are no guarantees. However, the situation should remain stable at least for now.

Gazprom (GAZPS) price index change during week 17; Source: http://www.tikr.ru/

This week was not an exception since the obvious trend for the RTS index is clearly downwards. It has been dropping for 8 weeks straight now and there is no reason to believe that it might reverse itself. Due to the expectations of oil prices to drop next week and having in mind Russias reliance on exports, investors were selling. Moreover, market doubts that newly elected president Putin will take necessary economic reforms, which puts a downwards pressure on RTS index. Review by: Tautrimas Lengvinas, Edgaras Marcinkus, Nerijus Ruginis, Kipras Kazlauskas