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The Russian stock market is the
real way to make a profit
The Russian stock
market was formed in the first half of the 90’s. After the financial and
political crisis of 1998 it significantly strengthened and currently, represents
a reliable trading system, with infrastructure, which can compete with the
leading western markets. At the present time it is one of the most dynamically
developing emerging markets in the world. The participation of private and
institutional investors, both local and international is rising, since the
risks become more and more balanced and are compensated by high profits.
Modern technologies
allow practically everyone, residents and non-residents, to participate in the
Russian stock market.
Primary Russian stock exchange floors:
·
Moscow
Inter-Bank Currency Exchange (MICEX)
·
Russian Trading System (RTS)
·
Saint-Petersburg Currency Exchange (SPCEX)
Most operations on
the Russian market are executed with the so-called “blue chips”, i.e. liquid
stocks. The Russian market’s blue chips are represented primary by the three sectors-
oil, communications and energy. They include the RAO UES, Surgutneftegas,
Lukoil, Rostelecom, Mosenergo, Norilsky Nickel, Sberbank, Tatneft, Gazprom, Yukos, AvtoVaz, etc., stocks. At the same time quite a few Russian
stocks are traded as ADRs on the biggest Western
European and American exchanges. Even the world’s biggest New York Stock
Exchange is the host to such well-known Russian companies, as Wimm-Bill-Dunn Foodstuff, Vimpelcom,
etc.
Reasons to be on the Russian stock market
·
High Russian economy growth potential, which will be reflected in rising
stock prices
·
Developing rate of the equities market is one of the fastest in the
world
·
Trading volume and the market liquidity are rising fast
·
Low commission rates compared to the foreign markets
·
Ability to operate in both local and hard currency, with easy conversion
options
·
Great number of “undiscovered” 2nd and 3rd tier
stocks, representing apparent future investment opportunities
This point can be explained in a
simple way. Currently there is a large group of stable and prosperous
companies, important players in various sectors of economy, with great future
potential, which can be qualified as “illiquid stocks”. Usually this happens
because the large stockholders, private (usually the management) and
institutional prefer to sacrifice liquidity of their holdings in return for
limited transparency and tight control of financial streams of the company.
However, the stock market growth, and growing demand for financial transparency
on the part of the state and lending institutions, brings those holders to the
point, when they start realizing the benefits of their investments’ liquidity.
As time goes by, the liquidity of many stocks is increasing, and this trend is
about to continue.
MARKET GROWTH STATISTICS
Stocks Growth Examples, prices in USD
| | 2000 | 2001 | % | 2002 | % | 2003 | % | 2004 | % | 2005 | % | 2006 | % |
| Gazprom |
0,2933 |
0,5209 |
77,60% |
0,7621 |
46,30% |
1,2886 |
69,09% |
2,7593 |
114,13% |
6,7558 |
144,84% |
11,5 |
70,22% |
| RAO UES |
0,082 |
0,1573 |
91,83% |
0,1288 |
-18,12% |
0,277 |
115,06% |
0,285 |
2,89% |
0,424 |
48,77% |
1,08 |
154,72% |
| Transneft |
54,5 |
210,5 |
286,24% |
346 |
64,37% |
590 |
70,52% |
890 |
50,85% |
2360 |
165,17% |
2295 |
-2,75% |
| Severstal |
0,72 |
1,76 |
144,44% |
1,98 |
12,50% |
4,86 |
145,45% |
6,44 |
32,51% |
9,9 |
53,73% |
11,2 |
13,13% |
| NorNickel |
7,3 |
17,02 |
133,15% |
20,25 |
18,98% |
65,15 |
221,73% |
54,4 |
-16,50% |
88,6 |
62,87% |
157 |
77,20% |
| Lukoil |
9,25 |
12,23 |
32,22% |
15,42 |
26,08% |
23,25 |
50,78% |
30,35 |
30,54% |
59,4 |
95,72% |
87,95 |
48,06% |
| Sberbank |
25,25 |
77,5 |
206,93% |
192,5 |
148,39% |
260,5 |
35,32% |
483 |
85,41% |
1310 |
171,22% |
3450 |
163,36% |
| Rostelecom |
0,86 |
0,9125 |
6,10% |
1,21 |
32,60% |
2,04 |
68,60% |
1,83 |
-10,29% |
2,365 |
29,23% |
7,65 |
223,47% |
Market growth, RTS index, %
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 |
| 143,29 |
260,05 |
359,07 |
567,25 |
614,11 |
1125,6 |
1921,92 |
| |
81,49% |
38,08% |
57,98% |
8,26% |
83,29% |
70,75% |
Market Growth, MICEX Index, %
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 |
| 135,73 |
237,63 |
317,63 |
514,71 |
552,22 |
1011 |
1693,47 |
| |
75,08% |
33,67% |
62,05% |
7,29% |
83,08% |
67,50% |
Market Capitalization, bln. $
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 |
| 39,6 |
71,19 |
102,15 |
172,5 |
205,54 |
399,83 |
966,02 |
| |
79,77% |
43,49% |
68,87% |
19,15% |
94,53% |
141,61% |
MICEX
Top 10 Index
MICEX
Index
RTS
Index
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