Market Overview: Russian Stock Market RTS 2011, wk.

16
Week 16 was restless and volatile for Russian Stock Market (RTS). On Monday RTS experienced
a tremendous drop, resulting in 1941.43 points. However by the end of the week RTS not only
recovered its positions, but also has finished this week in 0.59% surplus. By the end of Friday
session RTS index was equal to 2047.60 points. Strong drop on Monday was caused by change of
USA credit from agency S&P. On Monday S&P declared that USA sovereign rating downgraded
from “stable” to “negative”, keeping AAA level. Bad news from Europe, especially from Greece
slowed down the recovery. Market was quite passive on Friday because of public holidays in many
countries due to Easter. Oil and gas sector experienced the biggest growth this week,
telecommunication sector the biggest decline, 6.15% and -0.21% respectively. These week winners
are Polyus Gold (PLZLS) with 8.86% growth and Tatneft (TATNS) which experienced an
increase resulted in 5.72%. Week 16 was disappointing for Sberbank (SBERS) which declined for
1.52%.

Chart 1. RTS in week 16. Source: tikr.ru

The biggest surprise of this week was Polyus Gold (PLZLS), which is the leading gold producer in
Russia and Kazakhstan, and the only Russian company among world’s largest gold producers.
Share price at the beginning of the week was 40.80 EUR, however, due to certain factors it rocketed

1 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained in
it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
Market Overview: Russian Stock Market RTS 2011, wk. 16
to 44.41 EUR, which eventually resulted in 8.85% increase. 16th week was very abundant, firstly,
as the USA is implementing expansionary monetary policy and their budget deficit is enormous US
dollar depreciates, therefore gold becomes more attractive as alternative investment. It boosted gold
price by 1.6% this week. Secondly, PLZLS plans amalgamation with foreign companies, among
them are AngioGold Ashanti and Newmont Mining, it might result that PLZLS will be in the top 3
biggest gold companies. And the last and definitely not the least reasons for such increase in share
price is PLZLS performance – it increased it sales by 68% this year and board of directors
approved payment of dividends – 0.49 EUR per share.

Chart 2. PLZLS in week 16. Source tikr.ru

As it was mentioned earlier Tatneft (TATNS) was the second most successful firm during previous
week. TATNS experienced strong growth during Tuesday which resulted in 5.18%. Afterwards
TATNS had correction, and at the end of the week increase was equal to 5.72%. Recently TATNS
improved its technical base, implementing different innovations connected with extraction of oil.
Moreover TATNS increased its dividend payables on preference shares. But the main reason was
implementing new tax regime, which will give an advantage for the company, due to lower tax
expenses.

Soon annual report for 2010 year will be published. According to different experts previous year
wasn’t successful for TATNS and currently its shares are considerably overvalued.

2 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained in
it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
Market Overview: Russian Stock Market RTS 2011, wk. 16

Chart 3. TATNS in week 16. Source: tikr.ru

Sberbank (SBERS) had the biggest decline on the 16th week. At the very beginning of the week
share price decreased from 2.60 EUR to 2.45 EUR less than in one day. It might be effect of the
article published by RosBiznesKonsalting (on rbc.ru) in which was claimed that SBERS’s shares
are overvalued. Starting on Tuesday during remaining week share prices were slowly regaining
their old value. Closing price was 2.56 EUR, which eventually resulted in negative price
development for whole week -1.52%.

3 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained in
it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
Market Overview: Russian Stock Market RTS 2011, wk. 16

Chart 4. SBERS in week 16. Source: tikr.ru

Next week will start slowly due to the holidays. Several important macroeconomic events and news
will come from the U.S. in the middle of the week that will increase the activity also in the Russian
markets. On the background of expected positive data, the short-term optimism in the market will
continue until the end of April when the companies’ financial reports and dividends will be
announced. According to results on Friday previous week, the Russian market participants prefer to
keep buying, however, one should be cautious, because the resistance levels will be reached soon
and also after the end of season no one wants to have a portfolio stuffed with stocks in May. So the
market is still volatile due to ambiguous situation in the oil industry as well as problematic
economic situation in the U.S., therefore, the forecast is to remain optimistic about Russian stocks
next week, but also remain cautious and follow the situation, because the market can also easily
turn around.

Review by: Laura Laube, Eriks Petrovs, Valerijs Rezvijs, Eduards Sidorovics

4 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained in
it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.