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A. Potemkin A. Potemkin MICEX, PresidentMICEX, President
Russian stock market’s SWOT Russian stock market’s SWOT analysisanalysis: : Moscow’s viewpointMoscow’s viewpoint
2
What makes the Russian stock market grow?
Volume of transactions with Russian equities and DR's
0
50
100
150
200
250
300
350
1 Q 2005 2 Q 3 Q 4 Q 1 Q 2006 2 Q 3 Q 4 Q 1 Q 2007
bln USD
MICEX SE
RTS
Foreign exchanges
3
What makes the exchanges’ market grow?
Volume of trades with bonds
187.3
71.4
30.0
29.9
0
50
100
150
200
250
2005 2006
bln USD
OTC
MICEX SE
Volume of trades with equities
180
150
141.8
550.2
39.4
61.2
0
200
400
600
800
2005 2006
bln USD
OTC (estimated)
RTS Group
M ICEX SE
4
Issuers: stale bread or hot cakes?
The Тор-5 issuers equities' price change
-20
0
20
40
60
80
100
120
140
Gazprom Lukoil Sberbank UES ofRussia
NorilskNickel
%
2006
1Q 2007
Volume of trades with Russian equities and DR's in 1 Q 2007
Top 5 issuers
75.8%
Other
issuers
24.2%
5
Second tier equities — «goods in stock»
• For what purposes do you recommend to buy the second tier equities?
As long term investments with a positive outlook — 90%
• How fair are the market prices of the second tier equities? The market prices are lower than fair prices — 75%
Based on the MICEX April 2007 survey, respondents are analysts of investment companies and banks
6
Last 15 Months — Post IPO
• source: Tracey Pierce, Head of Global Business Development at the London Stock Exchange
CHELYABINSK
-17.0%
CHERKIZOVO
-10.2%
COM STAR
22.8% INTEGRA
17.9%
POLYM ETAL
-4.1%
ROSNEFT
11.3%
SEVERSTAL
7.2%
SISTEM A HALS
11.2%
SITRONICS
-17.0%
TM K
64.6%
TM E
-22.3%
-40%
-20%
0%
20%
40%
60%
80%
7
Coming soon …
• In 2007—2009 more than 150 companies plan to raise through IPO 30—50 bln USD
Largest IPO’s in the nearest future
Company IndustryEst. IPO volume
mln USD
1 Vneshtorgbank Banks 6 000
2 Freight Railway Company Transport 3 300
3Generation companies(RAO UES plans 10—15 IPO)
Electric power 10 000 — 15 000
4 Sovcomflot Transport 700
5 Pharmstandard Pharmacy 600
6 Ingosstrakh Insurance 500
• In 2005—2006, 27 Russian companies have raised 21 bln USD through IPO
8
Investors in the Russian market: who are they?
Number of investorsthsd, end of the year
Investors 2004 2005 2006March 2007
Individuals 96.5109.
8230.
9278.3
Legal entities 20.1 19.1 24.3 25.7
Non-residents 0.8 1.1 2.0 2.0
Mutual funds, trust accounts 0.01 4.2 7.7 8.8
Total117.
4134.
2264.
9314.7
Structure of the equities turnover on the MIC EX SE in 1Q 2007
Dealers trades 14.2%
Russian individuals23.8%
Russian legal entities27.3%
Non-residents27.7%
Clients of mutual funds 7.0%
9
Does the foreign capital have a citizenship?
3 992.90 (28)
14 468.40 (70)
140 376.20 (1263)
254.8 (380)
24.5 (7)
25.8 (81)
27.8 (17)
30.6 (32)
84.9 (3) 154.7 (39)
395.8 (33)
1
100
10 000
1 000 000
Others
Cyprus
United Kingdom
Ireland
British Virgin Islands
KazakhstanFinland
Lithuania
Germany
Belorussia
Austria
Investors-non-residents on the MICEX SE in 1Q 2007Turnover in mln USD and number of participants
1010
LSE25%
MICEX SE63%
RTS7.0%
DBAG2.3%
NYSE3.2%
How many indices doesthe Russian stock market need?
MICEX Index
RTS
FTSE Russia IOB Index
RTX
DJ Titans
Russia…
MSCI Russia
DAXglobal Russia
Market in 2006
11
Structure of trades by economy sectors
Number of issuers
103
7 7 83 2 3
11
10
11
0
20
40
60
80
100
120
Ga
s&o
il
Po
wer
Co
mm
unic
atio
ns
Meta
l
Hea
vy in
dust
ry
Cp
nsu
mer
Banks
Tra
nsp
ort
IT, m
ob
ile, m
ed
ia
Cha
mic
al
Structure of the volume of trades in 1Q 2007
0,003%
0,04%
0,06%
0,13%
36,6%
0,65%
10,3%
3,3%
13,8%
35,1%
12
Reserve list selection criteria
Тор-100: 100 most capitalized equities
Equities admitted to trading on the exchange
Тор-60: 60 most traded equities
Reserve list
(10 sectors)
60
1
60
1
7.03.0
ii
i
ii
ii
V
VCap
CapR
Selection criteria
30 equities in current index
not more than 3 equities from an economy sector (not more than 9 equities from a sector including current portfolio)
free-float > 5%
common or privileged equities of an issuer
if an issuer has equities of any type in an index portfolio, the equities of another type are not included
13
Index portfolio starting April 15, 2007
Index portfolio till 15 April (21 equities)
Current index portfolio (30 equities)
Heavy ind0.5%
Transport0.3%
Consumer0.1%
Telecom3.2%
IT, mobile, media5.9%
Gas&oil52.7%
Finance16.4%
Metal11.8%
Electric9,2%
Heavy ind0.4%
Transport0.3%
Telecom3.7%
IT, mobile, media7.4%
Gas&oil43.2%
Finance19,4%
Metal12,0%
Electric13,6%
14
MICEX Index
MICEX O&GMICEX TLC
Metals & Mining
MICEX PWR
Index family structure
Consumer Manufacturing
10 Large Caps
30 Middle Caps
50 Small Caps
15
Infrastructure development prospects:what should be done first?
Centralized clearing (CCP)• Lowers the participants costs• Increases stock market liquidity• Creates customary environment
for non-residents
Central Depository• Promotes OTC development• Creates customary environment
for non-residents• Offers securities owners’ rights
protection• Increases stock market
transparency
??
16
• www.micex.ru
• +7 495 234-48-11
• 13, B. Kislovskiy per., Moscow, 125009, Russia
Contacts