Research Notes

Low-liquidity portfolio

Our low-liquidity model portfolio rose 4.08% from January 30-February 5, 2004 mainly on the back of regional utility companies. By contrast, benchmark RTS rose by 2.45% over the same period.

As we have already noted, the robust upside displayed by regional utilities has prompted us to reassess our recommendations on a number of companies covered in our model portfolio.

We have removed Tomskenergo and Buryatenergo from our portfolio, replacing them with Permenergo and Stavropolenergo. The former two companies seem to have reached their fair market value, whereas the latter two hold considerable upside.

We reiterate our positive take on Krasnoyarskenergo. This company holds a fair amount of upside even though shares have risen quite a lot recently. We note that the value of the stake in Krasnoyark GES, owned by Krasnoyarskenergo, accounts for about 30% of Krasnoyarskenergo’s total market cap.

We are also shifting the weightage of securities inside the portfolio, upgrading Votkinskaya GES. We believe that the friction between Russal and UES over this hydroelectric power plant could fuel interest in the market for GESs.

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Sergey Arinin

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