Daily Review. 24th August, 2007

Russian equities were hit with a wave of sell-offs in early trading Friday due to a decline in Asian indexes and uncertainty on the US stock market. However, in the afternoon, growth resumed on the market thanks to upbeat macroeconomic data from the US, which reduce fears of a slowdown in economic growth. Stronger durable goods orders in the US in July significantly outpaced the 1% estimate and amounted to 5.9%. Demand for Surgutneftegaz on news of the companys possible statalization also gave headwind to the market. By the final bell, stock indexes were back to their starting positions. The RTS Index inched up 0.01% to 1,864.74 and the MICEX Index closed flat at 1,634.01. The price of Brent crude climbed over $70 a barrel. Meanwhile, Russian O&G stocks landed in different directions on MICEX. Gazprom lost 0.76%, Rosneft declined 0.51% and Tatneft inched down 0.01%. However, Lukoil added 0.16% and Gazprom Neft grew 0.70%. Surgutneftegaz enjoyed investor demand (+2.38%) on news that a controlling interest in the company could be assigned to Rosneftegaz prior to the 2008 presidential elections. UES fell 0.21% on MICEX after the cut-off date for shareholders which will vote on the holdings further reorganization on October 26. On the second-tier front, WGC-5 shot up 11% on news that FAS permitted Italian concern Enel to acquire 70% in WGC-5. At present, Enel owns 29.99% in the genco and therefore, the decision of the antimonopoly authority paves the way for the company to raise its interest to 100%. If Enel consolidates over 30%, the Italian company will have to announce a buyout offer for minority shareholders at a price at least corresponding to the acquisition of a blocking stake from UES, which is over 10% up on the current valuations even after the recent gains. Other blue chips ended mixed on MICEX. NorNickel eased 0.02%, Sberbank inched down 0.49% and VTB lost 1.07%. However, Rostelecom rose 0.74% and MTS edged up 0.07%. Market turnover was thin at $23.21 mln on benchmark RTS and $8,036.51 mln on MICEX.

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[Source: Russian Stock Market Blog]