July 24     - YUKOS changes presidents: Steven Theede replaced Semyon Kukes.

                 - The Accounting Chamber expressed doubts regarding the legality of MGTS (Moscow City Telephone)’s privatization, which as a result granted AFK Sistema control over the company in 1998.

                 - The German government decided to securitize part of Russia’s foreign debt. The yield on Euro-30 bonds grew by 21 points.

June 25    - Mikhail Fradkov delayed making a decision on unified generating company privatization until the end of the year. RAO EES shares lost 2.9%.

               
- TNK-BP published its consolidated report for 2003 according to international standards. It revealed a serious increase in the company’s earnings.

                - The Novolipetsk Metallurgical Plant announced net profit growth of 94% for 2003 and changes to the company’s dividend policy.

June 28   - Transneft released a condensed report for the first quarter of 2004 according to international standards. It showed earnings and profit growth.

                - The decision on whether to divide Chelyabenergo’s assets has been delayed until the second half of July.

June 29   - The financial group IFD Kapital came to an agreement with LUKoil to purchase the controlling stake in Petrokommerts Bank.

                - The Moscow Arbitration Court refused YUKOS’ appeal in the Ministry of Taxes’ case against the company. Its stock fell by 5.7%.

                - Andrei Sharonov announced that the government did not intend to return to the issue of liberalizing the market for Gazprom shares until the end of the year. Gazprom stock lost 1.7%.

                - Mosenergo shareholders’ meeting approved plans to restructure. Mosenergo stock gained 0.3%.

                - German Gref announced that the government intended to liberalize the market for Gazprom shares in late 2004. The company’s stock gained 4.1%.

Last Wednesday after the dollar dawdled around the 29.02-29.04 rubles to the dollar market, the American currency rose to 29.06. Now that tax time is over, the IBC rate fell from 10-15% to 3-5% p.a. and correspondent accounts grew to 220 billion rubles. Major market players got the opportunity to push for an exchange rate increase. This was encouraged by falling oil prices that for the time being are having a purely psychological effect on the market, as hard currency earnings continue to pour in according to higher-priced oil contracts. However, a stronger dollar did not become the trend. By the next day, the exchange rate had already fallen back to 29.04.
The past week was very eventful on the bond market. The news that the German government would securitize part of Russia’s debt sent the sovereign eurobond market into a panic. Yields on the benchmark Russia-30 issue jumped up by 21 points. By the end of the week, it became clear that the issue totaled 5 billion euros and would not increase in the next six months, news that was well received by investors. At the end of the week, Alan Greenspan announced plans to gradually raise the prime, which inspired optimism on the market.
The buying that dominated the federal ruble bond market early in the week changed to targeted sales and lower trading volumes as banks conducted their quarterly accounting and consequently ruble liquidity worsened. The lower quotes on foreign debt had a substantial negative effect on the market. By the end of tax payment time, buyers again appeared on the market and GKO-OFZ bonds managed to regain some of their losses, gaining an average of 45 points over the course of the week.
The sub-federal and corporate bond market did not avoid the profit fixation frenzy. Prices for corporate and sub-federal blue chips fell by 20-45 basis points in the first half of the week. Toward the end of the week, buying began anew and the weighted average price for municipal bonds lost only 8 points for the week, while prices on corporate bonds stayed at last week’s levels.
Declines dominated on the stock market for most of the week and only on the last day did some stocks bounce back. The RTS Index fell by 2.9% for the week. YUKOS (-8.4%), RAO EES (-8.7%), and Norilsk Nickel (-6.6%) fared worst. Tatneft broke away from the downward trend, gaining almost 4%.

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