OREANDA-NEWS. December 29, 2007. In 2007, the Russian stock market grew by 11.54%, to 1,888.86 as reflected by the MICEX Index, and ended the year on December 28 with a market capitalization of 24.4 trillion rubles (995 bln US dollars). The MICEX Index ended the year just short of its all-time high, of 1,969.91 points, recorded on December 12, 2007, the MICEX press service reports.

 - The top performing sectors were machine-building and metallurgical and mining companies, up +61.3% and +45.5%, respectively. The oil and gas sector is at the bottom of the performance results, ending the year down 3.6%.

- The best individual performing stock was the common shares of AVTOVAZ, up 163.2%, and the worst performing were the preference shares of Surgutneftegaz, down 47.7%.

- In the corporate bond market, the RCBI price index, which reflects the behavior of current interest rates prevailing in the market, was down 1.25% on the year, at 100.04 points. But the RCBI-c aggregate income index reached 156.43 points, an increase of 6.54%, reflecting the overall profitability of the Russian market for corporate bonds in 2007.

- There were significant changes to the family of the MICEX indices during 2007, including expansion of the MICEX Index to 30 stocks; more transparent and streamlined revision procedures of the Index; and the addition of sectoral and capitalization indices.

- Commenting on the MICEX Index developments, Mr. Alexei Rybnikov, CEO of MICEX Stock Exchange said, "2007 has been an interesting year for MICEX Stock Exchange and the Russian capital market in general. Overall it turned out to be profitable for investors, and the Exchange worked hard to provide and improve its indices — the barometers for measuring the Russian capital market performance."

In 2007, the MICEX Index grew by 11.54%, reaching 1,888.86 on the last trading day of the year. That compares with a performance of 67.5% in 2006. In 2007 the maximum value of the MICEX Index reached 1,969.91 points (on December 12 2007), an all-time high in the history of the Russian stock market. The minimum value of the MICEX Index during 2007 (1,516.09), was recorded on May 30. The market capitalization of the securities comprising the MICEX Index reached 24.4 trillion rubles (995 bln US dollars).

In 2007 the highest increase by sector came from the shares of machine-building and metallurgical companies.

Growth of MICEX Index-Machine Building (MICEX MNF) and the MICEX Index-Metallurgy and Mining (MICEX M&M) amounted to +61.3% and +45.5%, respectively. Other sectors growing well were electric power engineering and telecoms:

MICEX Index-Electric Power Engineering (MICEX PWR) grew by +7.9%, while MICEX Index-Telecommunications (MICEX TLC) went up by +14.5%.

Oil and gas companies’ stocks recorded worse than average performace in 2007: MICEX Index-Oil and Gas (MICEX O&G) dropped by 3.6%.

Of the stocks comprising the MICEX Index, the largest individual increase in 2007 came from the common shares of AVTOVAZ (+163.2%), Severstal (+82.5%), Mobile TeleSystems (+65.7%), Aeroflot (+62.4%), GMK Norilsk Nickel (+61.3%). The biggest declines came from preference and common shares in Surgutneftegaz (-47.7% and -26.5%, respectively) and preference shares in Transneft (-18.6%).

The RCBI (Russian Corporate Bond Index) indices had a variable year. The value of the RCBI price index, which reflects the behavior of current interest rates prevailing in the market, was 100.04 points at the close of trading on the MICEX Stock Exchange on December 28, 2007. The Index dropped by 1.25% compared with the end of the previous year against the backdrop of the global liquidity crisis. The value of RCBI-c aggregate income index reached 156.43 points, an increase of 6.54%, which reflects the overall profitability of the Russian market for corporate bonds in 2007.

RCBI indices comprise the most liquid corporate bonds with maturities of three months to five years, and reflect prevailing terms of bonds for corporate issuers using ruble-denominated bonds. The outstanding amount of the securities comprising the family of RCBI indices at the end of 2007 at par value exceeds 144 billion rubles. This is about 12% of the total nominal volume at issue of corporate bonds traded in the markets of the MICEX Group. The largest issues of corporate bonds included in the RCBI indices include securities of the following issuers: Bank VTB, Gazprom, Russian Railways, CenterTelecom, FSK UES and Russneft.

In 2007, there were significant qualitative changes in the family of the MICEX indices. The composition of the MICEX Index was expanded to include 30 stocks representing the main sectors of the Russian economy. The composition of the MICEX Index also became more transparent and streamlined, primarily thanks to the established frequency of revision of the index composition (twice a year) and the quarterly publication of the waiting list for the Index.

Furthermore, the developers of the Rules of Calculation of the MICEX Index took into account the standards of Russian and international regulations established for indices on which index funds can be based. As a result, the MICEX Index is today used by management companies as an underlying asset for 33 index funds, the total net asset value of which is more than 6.5 billion rubles.

The share of securities comprising the MICEX Index in the overall turnover of the equity market on the MICEX Stock Exchange exceeds 98%. The capitalization of securities comprising the MICEX Index is more than 83% of the capitalization of the exchange-based equity market. The shares of Gazprom, LUKoil, Surgutneftegaz, Sberbank, RAO UES and Rosneft have the heaviest weighting in the MICEX Index.

Another measure aimed at developing the investment opportunities within the Russian market was the launch of five sectoral indices (oil and gas, power engineering, telecoms, metallurgy and machine building) and three capitalization indices (high, standard and basic capitalization) in 2007. These are innovative indicators for the Russian market, and enable the evaluation of the behavior of prices of stocks of companies segmented by industry and market capitalization. From the methodology perspective, the sectoral indices are very close to the MICEX Index, which is a “family-forming” index relative to the sectoral indices. The latter reflect more precisely the situation within major industries represented in the MICEX Index.

It was also in 2007 that MICEX Stock Exchange began to calculate its three capitalization indices. Together, they comprise 95 common stocks traded on the Exchange. In 2007, growth of the capitalization indices amounted to, respectively:

- the MICEX Index-High Capitalization (MICEX LC): +9.9%;

- the MICEX Index-Standard Capitalization (MICEX MC): +15.6%;

- the MICEX Index-Basic Capitalization (MICEX SC): +29.1%.

The range of securities that are traded on the markets of the MICEX Group and the high level of liquidity enable the implementation of complex investment strategies based on specialized indicators that include, first and foremost, the MICEX stock market indices.