August 28, 2008

Russian Stock Market: Tested by Crisis

E. Ellinski, MICEX Vice-President

2

The Russian stock market and the world financial crisis

S&P upgrades Russia’s rating to investment-grade level

Liberalization of the market for Gazprom shares

Maximum drop in the Chinese stock market over the last 10 years

Bear Stearns announces losses on bonds backed by subprime mortgage

US largest banks and investment companies (in particular, Citigroup and Merrill Lynch) announce record-high losses

D.Medvedev wins presidential election

Bear Stearns: shortage of liquidity, appeal to Federal Reserve for urgent financing

For the first time since 2001, Federal Reserve urgently cuts base interest rate

Fall of stocks of Fannie Maeand Freddie Mac; US Treasury and Federal Reserve promise them assistance

Liquidity crisis in the world market, ECB, Federal Reserve and Asian CBs increase volumes of refinancing

3

Behavior of world stock market indices

Indices of developed markets and BRIC countries

2006 2007 2008*

DJIA(USA)

16,3% 6,4% -14,2%

FTSE 100 (Great Britain)

26,1% 5,2% -16,2%

DAX 30(Germany)

36,0% 36,4% -14,9%

Nikkei 225(Japan)

5,9% -6,2% -8,7%

BOVESPA(Brazil)

44,6% 72,9% 5,5%

MICEX Index(Russia)

82,9% 20,1% -17,4%

SENSEX(India)

49,3% 65,2% -34,4%

SSEC(China)

138,3% 110,1% -43,6%

HSI(Hong Kong)

33,8% 38,9% -18,3%

80

100

120

140

160

180

200

220

240

2006

Dec

2007

Jan

Feb

Mar

ch Apr

May

June

July

Aug

Sep

t

Oct

Nov

Dec

2008

Jan

Feb

Mar

ch Apr

May

June

July

%

DJ IA

FTSE 100

DAX 30

Nikkei 225

MICEX Index

Bovespa

Sensex

SSEC

НSI

(29 December 2006 =100%)

* — January–July. Changes are calculated based on values of indices in USD.

4

Corporate bonds market

Volume and number of placements

513324

31

89449854

4642

31

8

30

18

493745

24

2424

0

5

10

15

20

25

1Q2006

2Q 3Q 4Q 1Q2007

2Q 3Q 4Q 1Q2008

2Q

billion USD

External market

MICEX SE

Bonds yield in the secondary market, % (at the end of six months)

Issuer’s rating

2nd half of 2006

1st half of 2007

2nd half of 2007

1st half of 2008

BBB- and up

6,7 6,7 7,4 7,9

ВВ- — ВВ+ 8,2 7,7 9,3 9,5

B+ and below

9,5 9,3 11,6 11,6

Without rating

10,8 10,8 12,0 12,9

Market for initial placements of stocks and bonds

Volume and number of IPO/SPOof Russian issuers

2

4

1

7

4

10

2

11

1

6

0

2

4

6

8

10

12

14

16

1Q2006

2Q 3Q 4Q 1Q2007

2Q 3Q 4Q 1Q2008

2Q

billion USD

Volume

Number of IPO/SPO

5

IPO/SPO of Russian companies in 2008

Date CompanyVolume,mln USD

TypePlacement

volume/new size of authorized capital, %

Listing (secondary

trading)

26.03TGK-7(Volzhskaya TGK)

463,7 IPO 12,9 MICEX, RTS

7.04 TGK-13 471,0 IPO 33,2 MICEX, RTS

16.04 Magnit 489,5 SPO 13,8MICEX, RTS, LSE

30.04GlobalTrans Investment Plc

449,4 IPO 29,0 LSE

7.05 X5 Retail Group 190,9 SPO 2,1 LSE

20.05 Cherkizovo Group 82,4 SPO 8,1MICEX, RTS, LSE

6.06 Open Investments 491,5 SPO 11,1 RTS

22.07 Razgulyai Group 295,2 SPO 24,1 MICEX, RTS

12.08 Akron 2,7 SPO 0,1 LSE

Secondary share market

Breakdown of trading in the internal on-exchange and OTC share market in the 1st

half of 2008

On-exchange trades on MICEX SE

68%

OTC trades31%

On-exchange trades on RTS

1%

Trade volume in the on-exchange market for stocks and depositary receipts

0

100

200

300

400

500

600

1st halfof 2005

2ndhalf

1st halfof 2006

2ndhalf

1st halfof 2007

2ndhalf

1st halfof 2008

billion USD

External market

RTS Group

MICEX SE

6

P/E coefficient* for certain countries and regions

BRIC

Eastern Europe

Middle East and

Africa

Asia without

J apan

Oceania

North America

Countries of

Persian Gulf

Latin America and

Caribbean

countries

Western Europe

Russia

0 5 10 15 20

P/ENumber of analyzed

stocks

China 21,7 1801

USA 16,0 3774

Canada 15,8 466

Brazil 14,1 234

Spain 14,0 229

Italy 13,0 126

France 12,8 210

Japan 12,5 3182

Germany 11,9 96

Great Britain 11,6 150

Indonesia 11,3 260

South Korea 10,7 1204

India 10,3 1705

Russia 10,2 264

Australia 9,5 670

Singapore 7,7 469

Hong Kong 7,1 771

7* — August 2008, Bloomberg

P/E coefficient* for certain industries of BRIC countries

BRIC Brazil Russia India China

All industries 15,3 14,1 10,2 10,3 21,7

Consumer services 25,2 18,8 22,9 15,2 30,6

Medicine, pharmaceutics and biotechnologies 18,5 39,9 20,2 10,3 31,5

Production and distribution of electric power, gas and water

18,4 8,6 16,6 19,7 22,9

Information technologies 16,3 17,4 7,2 12,1 25,4

Industrial goods 15,6 12,1 13,9 10,2 20,4

Telecommunications 15,1 18,3 8,2 13,0 23,5

Consumer goods 13,5 16,0 10,8 9,2 21,0

Finances 13,4 12,5 11,4 9,6 17,0

Production of semi-processed materials (metals, plastic, building materials, paper, etc.)

12,4 12,8 8,6 8,5 19,4

Oil and gas production 9,7 13,4 6,4 15,8 10,4

Number of analyzed stocks 4004 234 264 1705 1801

8* — August 2008, Bloomberg

9

Internationalization of the Russian financial market

Nonresidents' average volume of trading in MICEX SE's secondary share market

0,3

0,8

1,5

1,918

13

31

36

0

10

20

30

40

50

2005 2006 2007 2008*

%

0

0,5

1

1,5

2

2,5billion USD

Trade volume

Proportion

Net purchase of stocks

-100

-50

0

50

100

150

1st half of 2007 2nd half of 2007 1st half of 2008

billion RUR

Dealer operationsIndividualsLegal entitiesClients who have their funds in trust managementNonresidents

9* — January–July

Breakdown of trading in the share market

Net purchase of stocks in the 1st half of 2008

-80

-60

-40

-20

0

20

40

60

80

billion RURMetallurgy

Telecoms

Fuel industry

Finances

Electric power engineering

Other industries

10

Dealer operations Individuals Legal entitiesClients who have

their funds in trust management

Nonresidents

Attraction of long-term foreign investors

Clients-nonresidents on MICEX Stock Exchange

CountriesNumber of registered clients-

nonresidents

Cyprus 2 036

Japan 379

Ukraine 319

Byelorussia 259

Kazakhstan 92

Great Britain 90

Uzbekistan 61

British Virgin Islands 59

Lithuania 58

Armenia 57

USA 54

Latvia 50

Germany 46

Moldova 39

China 28

Israel 27

Seychelles 22

Azerbaijan 17

Vietnam 15

India 15

Foreign investors in Russian stocks and depositary receipts*(at year-end)

2005 2006 2007

Assets under management,billion USD.

1 092,1 1 432,62

206,7

Investments in Russian stocks, billion USD.

22,8 49,5 73,4

Share of Russian assets in assets 2,1% 3,4% 3,3%

Portfolio turnover:

high (>70%) 50,3% 55,9% 57,7%

average (33%—70%) 39,1% 29,5% 35,9%

low (<33%) 10,6% 14,6% 6,4%

* Source: Interfax Business Service (materials from Thomson One for IR)

11

Development of internal investment base

Volume of pension savings and pension reserves

0

100

200

300

400

500

2002 2003 2004 2005 2006 2007 2008(March)

billion RUR

Pension savings (compulsory pension insurance)

Pension reserves (voluntary pension insurance)

Financial potential and volume of investments in stocks of certain categories of investors*

Financial potential

Volume of investments in

stocks

billion RUR billion RUR %

Banks 20125 316 2

Insurance companies

780 66 8

Investment funds 765 384 50

Pension reserves of non-state pension funds

473 95 20

Pension savings 402 12 3

* — at the end of 2007

12

Project MICEX Discovery

MICEX Discovery — selection criteria:

● Service in the NDC

● Liquidity

● Transparency

● Expert opinion(interest of the market)

Breakdown of revenues of companies from MICEX Discovery* by sectors

Extractive industries27,2%

Transport1,1%

Telecoms2,2%

Development0,04%

Electric power engineering

21,8%

Chemical industry2,6%

Aircraft engineering2,7%

Metal-fabricating industries

8,9%

Metallurgy33,5%

* — according to data from quarterly reports for the 1st quarter of 2008 13

Improvement of the infrastructure and development of instruments

14

•Concentration of liquidity for Russian assets

•Creation of IPO market

•Advent of foreign investors

•IGC Sector

•Commercial papers

•Simple clearing

International financial hub:

•Considerable number of foreign investors

•Ruble is a currency of international settlements

•Trading in foreign securities

•Financial and banking services satisfying best world standards

MICEX Discovery

New instruments (RDRs, foreign securities, infrastructure bonds)

T+3 settlements

Creation of integrated financial market covering CIS

2006 2007 2008 2009 2010 2011 2012

Transition to partial preliminary deposition of funds in the stock market

Implementation of CCP in the stock market

2005

NEW YORKNEW YORK LONDONLONDON

PARISPARIS FRANKFURTFRANKFURT

MOSCOW

SYNGAPORESYNGAPORE

HONG KONGHONG KONG

TOKYOTOKYO

15

Moscow: an international financial hub

16

Contacts

● Address:۰ 13 B.Kislovskiy Per., Moscow, 125009, Russia

● Telephone:۰ (495) 234-48-11

● Fax:۰ (495) 705-96-22

● E-mail:۰ info@micex.com

● Web site:۰ www.micex.ru

Prepared by Information and Analysis Division of MICEX