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Throughout February, the US stock market was displaying moderate growth. The positive trend could be explained by the publication of favorable data on inflation in the USA and some macroeconomic indices in December 2006, indicative of a stable economic growth. All this lowered the probability of any further increase of the rate of discount and promoted growth not only of the US market, but also of the stock markets This was calculated on the basis of the indices of the corporate bonds tradable on the MICEX, generated by the Zenit Bank. developing countries. A special comment should be made concerning the Chinese share market, which showed a noticeable downward trend during February after the release of information concerning the possibility of official restrictions on transactions with the shares of Chinese companies being introduced, which, from the point of view of the authorities, could help to cool down the market and decrease the flows of speculation capital.

Corporate news Open-End Joint-Stock Company Gazprom On 13 February 2007, the Open-End Joint-Stock Company Gazprom presented its consolidated intermediate shorter financial report for the first 9 months of 2006 (not audited), prepared in accordance with the International Accounting Standard 34 Intermediate Financial Rreporting (IAS 34).

During the first 9 months of 2006, net proceeds from the sales of gas increased by 285.03 billion roubles, or by 39 % against the same period of 2005, and amounted to 1,008.34 billion roubles, which was mainly accounted for by the increased prices applied in the transactions of the supply if gas to Europe and to the former USSR countries, as well as by volumes of gas sales, growing in physical terms. During the same period, the operational costs, as compared to the same period of 2005, increased by 425.58 billion roubles, or by 72 %, and amounted to 1, 012.9 billion roubles. This rise was produced mainly by the consolidation of Gazprom neft, whose indices are now incorporated in the consolidated reports of the Gazprom group from the moment of such control being established Q IV 2005.

The amount of profits during that period, due to Gazproms shareholders, in the first 9 months of was 442.29 billion roubles, which is by 210.17 billion roubles, or by 91 %, more than in the same period of 2005.

On 21 February, the Open-End Joint-Stock Company Gazprom placed rouble-denominated shares of 9 series in the amount of 5 billion roubles, with face value of 1000 roubles and 7-year turnover. The rate of interest on 9 coupons, payable every 182 days, by the results of tender on the MICEX was established at 7.23 % per annum. Investors placed bids in the amount of more than 9 billion roubles. The loans organizers were the investment group Renaissance Capital and the Open-End Joint-Stock Company Rosbank, one co-organizer the investment company Gorizont, and the financial consultant was the Open-End JointStock Company Federalnaia fondovaia korporatsiia [Federal Stock Corporation]. The attracted funds will be spent on the financing of investments, the implementation of Gazproms new prospective projects, the refinancing of a part of its debts, and the optimization of the structure of its debt portfolio.

Open-End Joint-Stock Company GMK Norilskii Nikel In February, the Open-End Joint-Stock Company GMK Norilskii Nikel announced the approval, by the regulating agencies, of the transaction with OM Group, Inc. (OMG), involving the acquisition of that companys nickel business. In particular, on 6 February 2007, the European Commission approved the suggested transaction in accordance with the EU regulations on transactions with its participation. Besides, the company was granted the permission of the Australian government in accordance with Australias legislation on foreign investments, and the permission of the Ministry of Trade of the Peoples Republic of China.

Within the framework of this transaction, GMK Norilskii Nikel will acquire a nickel business worth $ 408 million in cash, without financial debts less money assets. The list of assets being acquired includes the following property:

OMGs nickel-refining plant at Harjavalta, Finland, OMGs division for extraction and leaching of nickel ore at Cawse, Western Australia, 20 % of shares in MPI Nickel Pty. Ltd. (MPI) the company which is developing the nickel mines Black Swan and Silver Swan, as well as implementing the Honeymoon Well project, Up to 11.1 %, in the form of ordinary shares and convertible liabilities at Talvivaaran Kaivososakeyhti (a project for glomeruloblastic bioleaching at Kainuu, Finland).

The effectuation of this transaction will allow GMK Norilskii Nikel to continue the international expansion of its production activities by adding new sites in Australia and Finland and to strengthen its position within the global mining industry. The group Norilskii Nikel will increase its nickel-refining capacities by 60,000 tons of nickel per annum, while its own annual production of nickel (with the exception of materials being processed by tolling) will grow by approximately 35,000 40,000 tons.

On 22 February 2007, the Open-End Joint-Stock Company GMK Norilskii Nikel and a group of Western financial institutions signed a contract concerning the granting of a credit line in the amount of $ 450 million. The credit line was organized, fully signed and syndicated by Barclays Capital (an investment division of Barclays Bank PLC), ING Bank N.V., and an investment division of Socit Gnrale. Socit Gnrale also acts as an agent in respect of credit and an agent in respect of documentation. The total number of bids for the participation in the syndicate became much higher than the initially declared $ 300 mil lion, and so Norilskii Nikel decided that the credit line should be increased to $ 450 million. The company is to pay a margin of 42.5 basic points over LIBOR rate during the first three years, to be increased to basic points in the fourth and fifth years.

RAO UES of Russia The international rating agency Standard&Poor's raised the RAO UES of Russias rating from B+ to BB. The credit rating by the Russian scale was raised from ruA+ to ruAA. The forecast is stable.

Open-End Joint-Stock Company Sberbank of Russia On 21 February 2007, a meeting of Sberbank of Russias Supervisory Council took place, where the placement of an additional issue of the banks ordinary nominal book-entry shares by means of an open subscription among an unlimited range of persons.

After the expiry of the period of preferential rights for the acquisition of shares being in effect (from January to 19 February 2007), the Supervisory Council, by the results of a tender of offerings submitted by investors, determined the single price for the placement of shares for all investors, including persons with preferential right for the acquisition of shares. The Supervisory Council approved the price for the placement of shares as being equal to 89,000 roubles per one share. The payment for shares by the persons with preferential right for the acquisition will be effectuated during 7 (seven) working days from the date of publication of the announcement: from 22 February 2007 to 5 March 2007 (inclusive). The information as to when the payment for the shares being placed other than within the framework of preferential right is to begin will be published after the results of the placement under preferential right have been summed up and published.

Table 1.

Behavior of world stock exchange indices Change in month Change from Data as of 22 February Index value (%)9 years beginning (%) RTS (Russia) 1934.26 3.81% 7.54% Dow Jones Industrial Average (USA) 12647.48 1.29% 1.48% NASDAQ Composite (USA) 2515.1 3.27% 4.13% S&P 500 (USA) 1451.19 2.04% 2.32% FTSE 100 (UK) 6401.5 2.79% 2.90% DAX-30 (Germany) 6992.58 4.52% 6.00% CAC-40 (France) 5716.38 2.40% 3.15% Swiss Market (Switzerland) 9258 2.40% 5.38% Nikkei-225 (Japan) 18188.42 4.40% 5.59% Bovespa (Brazil) 46016 3.61% 3.47% IPC (Mexico) 28505.72 5.40% 7.78% IPSA (Chile) 2919.84 2.34% 8.41% Straits Times (Singapore) 3310.44 7.21% 10.87% Seoul Composite (South Korea) 1469.88 7.19% 2.47% ISE National-100 (Turkey) 43591.72 4.17% 11.44% Morgan Stanley Emerging Markets Free Index 940.238 4.24% 3.01% The currency market.

As shown by the months results, between 1 and 22 February the USD/rouble exchange rate went down noticeably - by 0.35 roubles (or 1.35 %) by comparison with the months beginning, and amounted to 26.roubles per 1 USD. The total trade volume in the USD in the SELT electronic trading system during the same period amounted to approximately $ 44.87 billion, the average daily turnover being $ 2.8 billion (as compared to approximately $ 29.4 billion, with the average daily turnover of $ 2.1 billion, in January). Thus, the trading activity of the participants in currency trade became markedly higher, as compared to the previ In respect to the indices as of 26 January 2007.

ous month. The peak trade volume in the USD during that period was registered on 2 February and amounted to approximately $ 4.86 billion, the lowest $ 1.33 billion on 19 February.

The roubles liquidity in the banking sector in February became noticeably lower than in January: the average amount of residuals on the correspondent accounts of credit institutions with the Bank of Russia in February was approximately 404.88 billion roubles, as compared to approximately 475.72 billion roubles in January.


Dynamics of the Official USD/RUR and EUR/RUR Exchange Rates in 2005-37.Official USD/RUR exchange rate 36.Official EUR/RUR exchange rate 8.

Dynamics of the Dollar/Euro Exchange Rate on the International Markets roubles 1 and 22 February, the euros exchange rate on the international market went up by $ 0.017 (or 1.34 %), to 1.314 USD for 1 euro. Against this background, February saw a slight growth of the euro/rouble exchange rate. In the period from 1 through 22 February, the euro/rouble exchange rate went up by 0.roubles (0.23 %) - from 34.38 to 34.46 roubles for 1 euro. The total turnover of trade in the euro in the SELT between 1 and 22 February was about 737.39 million euro, the average daily turnover being at the level of 49.1 million euro (as compared to about 682.8 million euro, with the average daily turnover of 48.8 million euro, in January). Thus, the activity of trading in foreign currencies on the Russian currency market increased noticeably by comparison with the previous month. The maximum volume of trade in the euro during the period under consideration was registered on 1 February at the level of 69 million euro, the minimum volume 21.9 million euro on 14 February.

Table 2.

Indices of financial markets Month October November December January February* monthly rate of inflation 0.3% 0.6% 0.8% 1.7% 1.3% estimated, annual rate of inflation in accordance 3.66% 7.44% 10.03% 22.42% 16.7%% with the tendency in given month refinancing interest rate of RF CB 11% 11% 11% 10.5% 10.5% average yield to maturity of OFZ, all issues (% per 6.00% 5.97% 5.93% 6.58% 6.1% year) turnover of GKO-OFZ market for given month 24.36 16.95 45.64 27.83 17.(bn. roubles) yield to maturity of Minfin bonds by end of month (% per year):

Tranche 5 5.18% 5.38% 5.47% 5.69% 5.6% Tranche 6 5.50% 5.42% 5.41% 5.49% 5.5% Tranche 7 4.17% 5.30% 5.57% 5.63% 5.5% Tranche yield to maturity of eurobonds by end of month (% 5.47% 5.28% 5.04% 5.45% 5.3% per year):

2007 5.24% 5.43% 5.70% 5.71% 5.1% 2010 5.87% 5.69% 5.64% 5.90% 5.7% 2018 6.15% 6.03% 5.96% 6.18% 6.1% 2028 5.71% 5.52% 5.50% 5.76% 5.6% MBK- MIACR rate (% per year by end of month) 9.82% 7.21% 3.65% 5.24% 6.15% on credits for 1 day official rouble/USD exchange rate by end of 26.7477 26.3147 26.3311 26.5331 26.month official rouble/euro exchange rate by end of month 34.0284 34.6775 34.6965 34.3896 34.rise in official rouble /USD exchange rate during -0.12% -1.62% 0.06% 0.77% -1.41% month (%) rise in official rouble / euro exchange rate during 0.15% 1.91% 0.05% -0.88% 0.37% month (%) Turnover of stock market in RTS in given month 907.19 1175.61 1094.42 929.19 993.(million USD for shares included in list for calculating RTS index ) value of RTS-1 index by the end of month 1613.57 1776.68 1921.92 1842.93 1858.changes of RTS-1 index during given month (%) 3.22% 10.11% 8.17% -4.11% 0.83% * Estimates D. Polevoi Real economy sector: trends and factors In 2006 GDP volume was equal to RUR 26621.30 bln and increased in real terms by 6.7% in comparison with the preceding year. In 2006 the increase in industrial production was 3.9%, in retail trade turnover - 13.0%, in investments in fixed assets 13.5%, in freight turnover 2.2%.

In January 2007 the index of industrial production went up to 108.4% and exceeded the figure of January of the preceding year by 4.4 p.p. In January 2007 an exceptionally high production index for manufacturing industry was observed 117.3% against 104.1% in the corresponding period of 2006. The production index in minerals extraction increased in January 2007 up to 104.2% against 101.2%.

The development of the Russian economy in 2006 was formed under the influence of the following most significant factors: the increase in domestic demand impact; advance growth of manufacturing industries in comparison with extraction industries, advance growth of investments in fixed assets in comparison with GDP and final demand dynamics; acceleration of final commodities import with regard to domestic production; intensive growth of the service sector; anticipating growth of wages in comparison with labor productivity, sustention of high customer demand; the acceleration of prices growth rates of manufacturing goods producers and service tariffs.

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