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As of monthly results (from December 24 through January 26), the blue chips have shown a volatile trend. The leaders of downgrading rates were demonstrated by GMK "Nornickel, VTB Bank and Sberbank of Russia shares, the value of which has decreased by 33.06 per cent, 29.88 per cent and 26.42 per cent, accordingly. Some less decline rates were observed about the shares of Surgutneftegas (by 15.70 per cent), Mosenergo (by 8.72 per cent), Tatneft (by 4.94 per cent) and Rosneft (by 1.14 per cent). At the same time, LUKOIL and GMK Rostelecom have demonstrated a growth by 10.19 per cent and 9.67 per cent accordingly, followed by Gasprom Neft (4.26 per cent) and Gasprom (0.28 per cent) (See Fig. 4).

Fig. 4. Dynamics of the Russian blue chip from December 24, 2008 to January 26, 2009.

In January the MICEX turnover leaders were: Gasprom(40.29 per cent of the total turnover), LUKOIL (15.89 per cent), Sberbank of Russia (14,67 per cent), Rosneft (6,12 per cent) and GMK Nornickel (5.67 per cent). Total share of transactions with the above five companies equities (blue chips) made about 82.64 per cent (all blue chips 89.86 per cent) of the gross turnover in the MICEX stock market in the period of December 25 to January 26.

According to MICEX information, as of January 26, the top five leaders of the domestic stock market in terms of capitalization, estimated on monthly average results, were: Gasprom RUR 2.613.56 bln, (RUR 2,359.07 bln in December), Rosneft 1067.83 bln (RUR 955.40 bln in preceding month), LUKOIL - RUR 810.41 bln (RUR 706.42 bln in preceding month), Surgutneftegas - RUR 618.02 bln (RUR 562.54 bln in preceding month), and Sberbank of Russia - RUR 482.25 bln (against RUR 539.24 bln).

Futures and Options Market In January, the activity of investors short-term MICEX market, as well as the number of transactions decreased twice as compared with the previous month. Thus, in the period from December through January 26 the total turnover in the MICEX futures market made approximately RUR 38.bln. (1,590 transactions, 1.02 mln of contracts), against RUR 78.65 bln (3,187 transactions, 2.40 mln of contracts) in December. Herewith, the largest volume of trading in January as a month earlier, was observed in futures RUR/USD, amounting to RUR 34.95 billion (148 transactions, 1 million of contracts); the turnover of trades with those futures has decreased twice in that period as compared with the preceding month. Herewith, prices of futures contracts, concluded in the current month in rubles/dollar in MICEX were within 34-35 rubles/dollar in February and within 34-36 rubles/dollar in March. Trading volume of transactions in futures on the MICEX index was RUR 0.6 million, whereas an average value of the MICEX index in the first quarter of 2009 is estimated at 580 points. The great est number of transactions (1,427) within the month was made with commodity futures, the volume of trades reached RUR 3,35 billion. There were no bids for interest rates and for RUR/Euro futures in January.

A similar situation was noted at the RTS FORTS futures market, where the investors activity in January has explicitly declined (by nearly 45 per cent) as compared with the preceding month. Thus, in the period of December 27 through January 26 the total turnover in the RTS futures and options market made approximately RUR 269.62 bln. (2.387 transactions, 12.24 mln contracts), against about RUR 471.90 bln (4,322 transactions, 20.83 mln of contracts) in December. Like before, futures enjoyed the greatest demand: the volume of trades in the period under review made RUR 259.50 billion (2,358.53 transactions, 11.84 mln of contracts). Herewith, prices of futures contracts, concluded in the current month in rubles/dollar in RTS FORTS or the first quarter of 2009 were within 34-35 rubles/dollar, while the average RTS index in the first quarter is estimated at 530-560 points. Options enjoyed far lower demand; the turnover amounted to about RUR 10.12 bln (28.25 transactions, 0.mln of contracts). The maximum daily turnover in the RTS futures market made RUR 29.26 billion in January (as of January 15), and minimum RUR 4.90 bln. (on January 11).

External factors behind Russian stock market dynamics In January the Russian financial market dynamics, as a month earlier, was dependant on the situation in the world financial markets, characterized by periods of sharp decline due to the negative news, as well as by periods of more optimistic investors behavior, urged by recurrent oil prices growth, as well as by measures, taken by governments of a number of countries to restore their financial systems stability. Among the basic factors of the adverse global market conditions, affecting the Russian market, one should mention:

information, published on the negative macroeconomic statistics in the U.S., in particular the growing unemployment, consumer confidence index decline, reduced consumer sales and the volume in the US primary housing market in December;

attracting by Commerzbank, one of the largest in terms of capitalization German bank Euro billion from the German government in order to maintain the stability of the bank after Dresdner Bank purchase;

information on the net loss of Citigroup as of 2008 results of USD 18,7 billion, as well as the anticipated losses of British Royal Bank of Scotland in 2008, amounting to USD 41 billion (primarily due to the merger of Netherland bank ABN Amro) and the largest German bank Deutsche Bank AG in the amount of about EURO 9 billion;

information about the possible bankruptcy of one of the world's largest chemical companies LyondellBasel Industries;

plans to reduce 13 per cent of the staff (about 13,5 thousand employees) of the world largest aluminum producer Alcoa Inc., one of the largest British bank Barclays Plc.; (about 2 thousand employees), by Microsoft company (5 thousand employees), as well as the additional staff reduction by the U.S. pharmaceutical company Pfizer (about 2,5 thousand employees);

profit decline of American Express as the fourth quarter of 2008 results by 79 per cent, as well as U.S. banks J.P.Morgan (by 64 per cent in 2008) and Bank of America (at 5,6 times to USD 2,56 billion in 2008);

a peak deficit in the U.S. budget in the fourth quarter of 2008 USD 485.2 billion (USD 454,billion within the complete 2007-2008 fiscal year) as a result of measures, taken to combat the economic crisis;

information on the sale of 51 per cent shares of the broker branch of Citigroup to Morgan Stanley bank for USD 2.7 billion;

decline of oil prices in January (in the current month oil price has fallen down below 38 dollars per barrel);

government decision to nationalize the Anglo Irish Bank in the framework of support to the national banking system.

However, the following events contributed to the growth of world financial markets;

increasing oil prices in late December due to the unstable situation in the Middle East (Israel military actions in the Gaza Strip);

information about the US FRS intention to purchase mortgage securities, amounting to USD 500 billion;

credit, obtained by automobile manufacturer Chrysler LLC from the U.S. government for USD 4 billion, and the decision of the U.S. government to purchase shares of General Motors Corp.

financial unit, amounting to USD 5 billion in the framework of the program for the support to the U.S. automotive industry;

an increase in late December by the Government of Japan the total cost of the plan to combat the economic crisis up to USD 255 billion.

reduction of the interest rate by the European Central Bank (ECB) to 2 per cent in mid-January.

All those factors urged volatility in the major global stock market indices. Thus, in January a significant downfall was noted in global indices, as compared with the indicators of the beginning of 2009 (up to by 15 per cent ), though indices of some developing countries have demonstrated growth up to 9 per cent. A similar trend was observed at the end of December 2008. For example, the indices of developing countries were characterized by both, a decline (basically by 2-7 per cent) and growth (by 4-7 per cent), while in the US and European markets indices were declining in general by 2-6 per cent (See Table 1 and Fig. 5).

Table Dynamics of the global stock indices (as of January 26, 2009) Dynamics Dynamics since Index Ticker Value within the the year month(%)13 beginning(%)MICEX (Russia) MICEXINDEXCF 613,56 0,82 -0,RTS (Russia) RTSI 539,38 -16,31 -14,Dow Jones Industrial (USA) Average DJI 8 116,03 -4,69 -7,(USA (USA) (USA) NASDAQ Composite (USA) NASD 1 489,46 -2,66 -5,S&P 500 (USA) SPX 836,57 -4,15 -7,FTSE 100 (UK) FTSE 4 209,01 -0,18 -5,DAX-30 (Germany) DAX 4 326,87 -6,53 -10,CAC-40 (France) CAC 2 955,37 -5,16 -8,Swiss Market (Switzerland) SSMI 5 417,07 0,32 -2,Nikkei-225 (Japan) NIKKEI 7 682,14 -12,10 -13,Bovespa (Brasil) BUSP 38 509,45 4,46 2,IPC (Mexico) IPC 19 583,08 -13,02 -12,IPSA (Chile) IPSA 2 514,90 7,00 5,Straits Times (Singapore) STI 1 685,23 -2,34 -4,Seoul Composite (South Korea) KS11 1 093,40 -2,19 -2,ISE National-100 (Turky) XU100 25 970,00 -2,00 -3,BSE 30 (India) BSE 8 674,35 -7,02 -10,Shanghai Composite (China) SSEC 1 990,66 7,51 9,Morgan Stanley Emerging Markets Free EFM 413,96 -7,24 -9,Index * Versus indices of December 26, Versus index indicator valid on September 27, 2006.

Versus index indicator valid on September 27, 2006.

Dynamics of the main USA and Russian stock indexes (in % to the date 01.11.2007) Fig. 5.

Corporate News VTB Bank Within the framework of enhanced cooperation with the real sector of the economy, VTB Bank has provided on January 20 a credit limit of RUR 6.12 billion to OAO NPK Uralvagonzavod for the funding of current activities.

On January 14, VTB Bank has disclosed the unconsolidated reporting for 2008, developed under RAS; assets increased by 69 per cent to RUR 2 552 billion; net profit has grown by 46 per cent, what has exceeded the relevant indicator of 2007 and amounted to RUR 26.3 billion.

Moreover, on January 22, VTB Bank has disclosed the preliminary unaudited financial performance results in accordance with IFRS as of September 30, 2008: net profit amounted to USD 316 million (net loss in the third quarter of 2008 amounted to USD 363 million); capital adequacy ratio, estimated as per the Bank for International Settlements method has remained at a high level of 14 per cent.

Gasprom On December 30, OAO Gazprom has submitted consolidated interim brief financial statement for the first half of 2008, developed under IFRS: sales proceeds (net after excise tax, VAT and customs duties) increased by 52 per cent to RUR 1 743 billion; operating expenses increased by 30 per cent to RUR 1 026.6 billion; profit has amounted to RUR 609.35 billion (which is by 53 per cent higher than in the same period in 2007). On January 20, OAO Gazprom has obtained the right to explore for and produce hydrocarbons at the El Assel deposit in Algeria, the share of OAO Gazprom in the project is 49 per cent.

Gasprom Neft On January 15 OAO Gazprom Neft repaid Eurobonds in the amount of USD 500 million.

Payment was made from the funds provided by Vnesheconombank, as well as from its own funds.

Sbebank of Russia On December 30 Sberbank of Russia and OAO Magnitogorsk metallurgical plant have signed a credit agreement on opening for OAO MMK a non-revolving credit line amounting to RUR billion, valid for 2 years for the funding of projects for construction of the production unit for thick metal sheets.

On January 26 Sberbank of Russia has disclosed financial statement for the first nine months of 2008 in accordance with IFRS: net profit amounted to RUR 90.2 billion (which is by 29,0 per cent higher than the indicator of the first nine months of 2007), return on assets made 2.2 per cent, return on own funds (ROE) for the same period is 17.9 per cent.

Tatneft On January 14, OAO Tatneft has disclosed financial performance indicators for 2008: extraction volume reached 25 766 171 tons (or 100.1 per cent as compared with the production volume in 2007);

715 square meters were drilled, 484 wellssites were constructed and handed over to customers, major repairs were performed at 2 689 wellssites.

Corporate bonds market In January, the volume of the domestic corporate bond market in Russia (as per nominal value of securities in circulation) for the first time in recent months has fallen down and made RUR 1665,billion,which is by 0,06 per cent lower than the similar indicator of December 2008. Within the period from December 25 last year to January 23 this year there were concluded by 23.0 thousand of transactions with corporate bonds in MICEX, totaling to RUR 24.3 billion (as compared with 33.thousand transactions for RUR 51.2 bln within November 25 December 24).

After a slight increase in December, there was noted the downward trend again in the index of the Russian market of corporate IFX-Cbonds (previously called RUX-Cbonds) since the beginning of the year. Within the period of December 24 of the last year to January 26 of the current year that index has declined by 5 p.p.(or by 2 per cent). Effective bonds yield continued its rapid growth (from 20.20 per cent to 24.28 per cent within the period uder review) and reached the maximum value over the past few years. The duration of the GKO-OFZ market portfolio as of January 26 was 511 days, having decreased (by 76 days) as compared with end of preceding year (FIG. 6).

Fig. 6. Russian corporate securities index and average weighted yield dynamicsIn January the number, as well as the amount of corporate bond issues has increased. In the period from December 25 to January 26 there were recorded 8 issues of corporate bonds, totaling to RUR 48.0 billion, what is 2,6 times more in volume than within the preceding period (from November 25 to December 24 only 5 issues totaling 18.7 billion rubles were recorded). However, this indicator is significantly lower than the level of August-September of the last year. The bulk of the registered corpo As per Cbonds company data.

rate bond issues was made by two series of bonds, issued by OAO Mobile TeleSystems for the total amount of RUR 30 billion and two series of bonds, issued by AKB Moscow Bank for Restructuring and Development (OAO), totaling to RUR 10 billion.

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